Magnesium Industry Chain Weakens across the Board, Weak Supply-Demand Conditions Keep Market under Continued Pressure [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the EXW VAT-exclusive price of 1-3 cm dolomite (Wutai) was 128 yuan/mt, flat WoW, and the EXW VAT-exclusive price of 2-4 cm dolomite (Wutai) was 158 yuan/mt, flat WoW.

This week, domestic EXW prices for dolomite remained largely stable, with the market showing a pattern of regional divergence. Supply side, several large stone quarries in Wutai, Shanxi, continued to halt production due to environmental protection checks, tightening the supply of local high-grade dolomite raw materials; production areas such as Ordos, Inner Mongolia, and Henan rerouted supplies to compensate, but overall national inventory remained ample. Demand side, magnesium smelters in Shanxi and Shaanxi maintained high operating rates, with just-in-time procurement providing bottom support for dolomite prices; however, downstream enterprises had sufficient prior stockpiles, leading to mostly restocking-based purchases and weak willingness for bulk procurement. Overall, supply and demand factors counterbalanced each other, with regional supply tightness coexisting with national supply looseness. Short-term dolomite prices are expected to maintain their stable trend.

1.2.1 Magnesium Ingot (Fugu, Shenmu - Main Production Area)

This week, magnesium prices were in the doldrums. As of press time, mainstream quotations for 99.90% magnesium ingot in the main production area were 15,750-15,850 yuan/mt, down 200 yuan/mt WoW.

This week, the domestic magnesium ingot market consolidated slightly lower, with a mix of bullish and bearish factors causing continuous market disturbances. Supply side, smelter inventories were under pressure, leading to proactive price cuts to boost transactions; the downstream market held a wait-and-see sentiment, with a strong sentiment of rushing to buy amid continuous price rise and holding back amid price downturn, resulting in overall weak purchase willingness and a slow destocking pace. Mid-week, magnesium prices breached the 16,000 yuan/mt mark, falling to 15,800 yuan/mt. As prices dipped, some magnesium plants announced equipment maintenance plans, and a small number of downstream buyers made just-in-time procurement at lower price levels. However, the limited purchase volume failed to change the weak supply-demand market pattern, and magnesium prices again fell under pressure.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, China’s FOB price was quoted at $2,220-2,330/mt, with an average price of $2,275/mt. This week, the magnesium ingot export market was generally in the doldrums. Affected by the EXW price of magnesium ingot, China’s FOB price drifted lower.

This week, the magnesium ingot export market was generally in the doldrums. The continuous decline in the domestic magnesium ingot EXW price drove the Tianjin port FOB quotation lower simultaneously. Markets outside China entered the off-season for demand, leading to insufficient downstream purchasing enthusiasm. Transactions were mostly just-in-time procurement, and some foreign clients seized the opportunity to push for lower prices, resulting in low actual transaction prices. At this stage, the export market sees few new orders. Without positive support, the short-term FOB price is expected to remain in the doldrums, following the spot price of domestic magnesium ingots.

1.3 Magnesium Powder

This week, mainstream EXW VAT-inclusive prices for 20-80 mesh magnesium powder in China were 17,000-17,100 yuan/mt; China’s FOB price was $2,385-2,485/mt.

This week, the magnesium powder market was generally in the doldrums. The continuous decline in raw material magnesium ingot prices dragged down both the EXW and FOB quotations for magnesium powder. Domestic demand contracted, with downstream buyers only restocking small volumes for just-in-time needs. Overseas client purchasing willingness was low, and export competitiveness was further suppressed by exchange rates and ocean freight rates, leading to sluggish market trading. Short-term, the magnesium powder market is expected to follow magnesium ingot and remain in the doldrums.

1.4 Magnesium Alloy

This week, mainstream EXW VAT-inclusive prices for magnesium alloy in China were 17,800-18,100 yuan/mt, and mainstream FOB prices for Chinese magnesium alloy were $2,585-2,665/mt.

This week, the magnesium alloy market drifted lower in tandem with magnesium ingot. Supply side divergence emerged: leading magnesium alloy enterprises maintained stable production, while small and medium-sized producers successively halted for maintenance, causing overall industry output to pull back slightly; however, high prior stockpiling levels meant spot supply remained ample. Demand side was significantly divergent due to the high-temperature off-season: magnesium alloy demand from the automotive sector remained stable, while demand from the two-wheeler downstream continued to weaken, resulting in an overall oversupply situation. Dragged down by the weak supply-demand structure, magnesium alloy processing fees continued to fall under pressure.

2 Weekly Summary

This week, the entire domestic magnesium industry chain was in the doldrums. Dolomite prices in Wutai, Shanxi, remained flat; regional supply tightened, but nationally, cargo was ample, making it difficult for just-in-time procurement alone to drive up prices. Mainstream 99.90% magnesium ingot in Fugu and Shenmu was 15,750-15,850 yuan/mt, down 200 yuan WoW. High in-factory inventory prompted producers to cut prices for sales, while downstream buyers held a wait-and-see stance, making only small restocking purchases, leading to slow destocking. The average FOB price for magnesium ingot at Tianjin port was $2,275/mt. Demand from markets outside China was sluggish due to the summer break, with foreign clients pushing for lower prices and new orders remaining scarce. Falling raw material prices dragged down quotations for magnesium powder and magnesium alloy. Small and medium-sized magnesium alloy plants cut production, but ample prior stockpiles, combined with weakening demand from the two-wheeler sector, put processing fees under pressure. Upstream and downstream demand weakened simultaneously, and cost support was insufficient. In the short term, the entire product category is expected to continue consolidating weakly.