Held Up Well Then Consolidated at Highs; Strong Supply, Weak Demand Pattern Unchanged [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

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

This week, dolomite delivered prices remained stable overall. Affected by the long-term production halt of the leading dolomite mine in Wutai, primary magnesium smelters in the main production areas were gradually adjusting procurement channels, with supplies shifting to other regional markets. The EXW quotes of dolomite from the new procurement channels had a certain price advantage over the original Wutai-sourced material, but the logistics infrastructure in the supply areas was insufficient, resulting in a relatively high proportion of freight costs in transportation. However, overall dolomite supply was ample, and dolomite delivered prices held steady.

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

This week, magnesium prices held up well. As of press time, mainstream quotations for 99.90% magnesium ingot in the main production area were 15,750-15,850 yuan/mt, up 50 yuan/mt WoW.

This week, the domestic magnesium ingot market performed firmly. At the beginning of the week, as the market returned from weekend, restocking from rigid demand in both domestic and export markets, combined with news-driven stimulus, caused smelters of primary magnesium to increasingly hold back from selling. Low-priced magnesium ingot supplies were quickly cleared, and EXW prices trended upward. However, high inventory and high production suppressed downstream willingness to purchase at higher price levels, leading to insufficient upward momentum for magnesium ingot. Subsequently, magnesium prices consolidated at highs. Overall, the supply-demand pattern for magnesium metal remained characterized by strong supply and weak demand, with prices moving sideways, hard to rise or fall.

1.2.2 Magnesium Ingot (Tianjin Port – China FOB)

This week, China FOB prices were reported at $2,220-2,360/mt, averaging $2,290/mt. Magnesium ingot export market quotes were narrowly firm overall, up $5/mt WoW.

This week, magnesium ingot export quotes were narrowly firm overall. At the beginning of the week, market sentiment recovered somewhat on the back of restocking for rigid demand, boosting producers’ willingness to hold prices firm and hold back from selling. However, downstream demand remained sluggish. Apart from small amounts of rigid-demand restocking, there was a lack of substantial concentrated procurement and stockpiling. Export prices followed the slight rise in magnesium ingot EXW prices but lacked sustained upward momentum. Overseas summer breaks and the traditional off-season led to sluggish trading in the export market. High ocean freight rates and exchange rate fluctuations further squeezed export profits. Downstream buyers pushed for lower prices in their limited procurement, and traders mostly adopted a wait-and-see attitude. This week, export quotes initially firmed in line with domestic EXW prices, but sustained upward momentum was insufficient, and quotes stabilized late in the week. The market is expected to maintain a narrow consolidation range in the near term.

1.3 Magnesium Powder

This week, mainstream tax-inclusive EXW prices for 20-80 mesh magnesium powder in China were 17,000-17,100 yuan/mt; China FOB prices were $2,400-2,500/mt.

This week, the magnesium powder market edged up slightly following magnesium ingot prices and then stabilized. Production halts and maintenance at some magnesium ingot producers led to a contraction on the supply side, providing short-term price support. On the demand side, however, overseas summer vacations and the downstream die-casting off-season exerted dual pressure, with procurement mainly based on rigid demand and sluggish market trading. Magnesium powder exports in June rose 21.2% MoM, but this was more of a corrective rebound from a low base earlier, rather than a fundamental improvement in demand. At present, supply-side maintenance in raw materials is underpinning the price floor for magnesium powder, but weak off-season demand and inventory buildup limit the upside room. Prices are likely to continue moving sideways in a narrow range in the short term.

1.4 Magnesium Alloy

This week, mainstream tax-inclusive EXW prices for magnesium alloy in China were 17,800-18,100 yuan/mt, with mainstream China FOB prices at $2,600-2,680/mt.

This week, magnesium alloy prices firmed in tandem with magnesium ingot. Due to the die-casting off-season, order reductions at magnesium alloy smelters intensified, and smelters progressively undertook maintenance shutdowns. Operating rates at leading magnesium alloy smelters were basically stable; some smelters carried out rotating maintenance, while tail-end smelters experienced widespread production halts. Overall magnesium alloy supply dropped sharply, and the pace of inventory buildup at magnesium alloy producers slowed. On the demand side, magnesium alloy die-casting plants showed average purchasing enthusiasm. The die-casting off-season and weakening end-use demand for two-wheelers combined to drive contraction in magnesium alloy demand. In summary, the magnesium alloy market displayed a supply-demand pattern with both sides weak, and magnesium alloy prices were under pressure.

2 Weekly Summary

This week, the magnesium market was firm initially and then consolidated. At the start of the week, restocking for rigid demand in domestic and export markets, along with news-driven sentiment, intensified smelters’ willingness to hold back from selling in the main production areas. Low-priced supplies were quickly cleared, and magnesium ingot quotes edged up slightly. However, persistently high inventory and high production continued to suppress downstream purchasing interest, causing insufficient upward momentum, and prices then consolidated. Overseas summer breaks and the traditional off-season kept export trading sluggish, while high ocean freight rates and exchange rate fluctuations squeezed export profits, making it difficult for upward momentum to sustain. Dolomite prices were stable. Affected by the long-term suspension of leading mines in Wutai, supply channels were gradually adjusted, but overall supply was sufficient, and delivered prices held steady. Magnesium powder and magnesium alloy prices moved slightly higher in tandem with magnesium ingot and then stabilized, with the die-casting off-season and weakening end-use demand for two-wheelers jointly weighing on demand. Operating rates among magnesium alloy producers diverged; tail-end producers suspended production on a large scale, leading to some supply-side contraction but slowing inventory buildup. Overall, the strong-supply, weak-demand pattern remained unchanged. In the short term, magnesium prices are expected to continue their narrow-range, hard-to-rise-or-fall trend.