Operating Rate Notably Declines; Manufacturer Inventories Undergo Slight Destocking; Circulation Inventories Continue to Accumulate [SMM Magnesium Weekly Data]

Production and Inventory Brief

1.1 Weekly Production

From July 3 to July 9, the weekly production of sample magnesium plants nationwide stood at 23,419 mt, and the weekly operating rate was 76.83%, down 7.41% WoW. According to the survey, multiple primary magnesium smelters entered a concentrated period of maintenance shutdowns this week, causing the overall industry operating rate to pull back significantly. A magnesium plant in Shanxi completed commissioning and produced magnesium ingot last week, but overall industry production cuts far exceeded the contribution from new capacity, keeping total primary magnesium production on a downward trend. The smelters in Shaanxi undergoing centralized maintenance plan to resume production mostly in mid to late July. Meanwhile, some producers indicated that the restart timing would be flexibly adjusted based on magnesium price movements. Next week, domestic primary magnesium production is expected to continue contracting.

1.1 Weekly Inventory

1. Producer inventories edged down 0.95% WoW this week, and China's magnesium ingot social inventory pulled back slightly. Multiple smelters in major production areas underwent centralized maintenance shutdowns, and the tightening of overall market supply supported destocking. However, regional divergence was notable: in Fugu, only a few enterprises actively cleared inventory and sold, causing factory inventories in Shaanxi to continue building; in contrast, Ningxia magnesium producers showed a strong willingness to sell, and local producer inventories dropped significantly, creating a stark contrast between the two regions' inventory trends.

2. Social inventory rose 3.8% WoW this week, showing a slight buildup. By region, inventories in Shaanxi, Shanxi, and at Tianjin port all accumulated to varying degrees. In Shaanxi, speculative sentiment strengthened somewhat, with some traders buying small amounts on dips to stockpile and wait for future market developments. In Shanxi, purchased goods from some traders gradually flowed into warehouses. At Tianjin port, export orders remained sluggish, and with deliveries not yet due, export destocking was hindered, resulting in inventory buildup. Overall, the digestion of circulating goods was slow, and inventory pressure may persist.