Cost Support Stabilizes Magnesium Ingot Bottom, Weak Domestic and Overseas Demand Keeps Market Consolidating [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

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

This week, delivered prices for dolomite remained generally stable. Affected by the continued production halt of major dolomite mines in Wutai, primary magnesium smelters in main producing areas adjusted their procurement structure, shifting sources to other regions. Notably, Hebi Investment Group has initiated a stable supply and production guarantee docking with fugu magnesium plants, with a cooperation goal to control the delivered price, tax included, for Hebi dolomite at below 170 yuan/mt, while local logistics support is expected to be improved to strengthen the long-term supply cooperation foundation. Overall market supply was sufficient, and with replenishment from multiple channels, delivered prices for dolomite were supported and stable.

1.2.1 Magnesium Ingot (Fugu, Shenmu - Main Producing Areas)

This week, magnesium prices held up well. By press time, mainstream quotations for 99.90% magnesium ingot in main producing areas were at 15,800-15,900 yuan/mt, up 100 yuan/mt WoW.

This week, domestic magnesium prices generally trended downward step by step. After the market reopened at the start of the week, smelters' sentiment of holding back from selling eased somewhat, leading to more low-priced supply, and magnesium price centers moved slightly lower. However, downstream buyers and traders had insufficient orders on hand, resulting in an overall sluggish trading atmosphere, and the market remained weak. Still, the pace of price decline was slow; supported by raw material costs, magnesium plants maintained some reluctance to sell, providing firm support at the bottom, and magnesium prices mainly consolidated at lows, with limited downside room.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, China FOB prices were quoted at $2,240-2,340/mt, with an average of $2,290/mt. The magnesium ingot export market showed a pattern of initial weakness followed by stability, with prices down $20/mt WoW.

This week, the magnesium ingot export market continued its weak sideways movement. Weak domestic demand led to strong wait-and-see sentiment among traders, with low restocking willingness, and only small quantities of just-in-time procurement were made, keeping trading sluggish. Overseas downstream summer breaks had not yet ended, and procurement pace significantly slowed in major consuming regions such as Europe, with few inquiries in the overseas market and strong pressure from overseas clients to push for lower prices, exacerbating the market weakness. In the short term, with a lack of strong demand boost, magnesium price rises were hindered; however, supported by costs, downside room was limited. It is expected that the market will continue its narrow-range subdued consolidation, and attention should be paid to the order recovery pace after the overseas summer breaks end.

1.3 Magnesium Powder

This week, mainstream EXW prices, tax included, for 20-80 mesh magnesium powder in China were 17,050-17,150 yuan/mt, and China FOB prices were $2,400-2,500/mt.

This week, the magnesium powder market moved sideways on a subdued note. Last week, prices briefly rebounded due to month-end delivery pull, but this week, with deliveries completed and downstream fear of high prices, insufficient follow-through on transactions led to a price pullback. On the demand side, domestic demand was mainly just-in-time, while overseas inquiries were scarce, and both domestic and external demand were weak, with the magnesium powder market lacking new orders for a boost. In the short term, magnesium powder lacked upward momentum, and it is expected to maintain its narrow-range subdued consolidation.

1.4 Magnesium Alloy

This week, mainstream EXW prices, tax included, for magnesium alloy in China were 17,800-18,100 yuan/mt, and mainstream FOB prices for China magnesium alloy were $2,590-2,670/mt.

This week, the magnesium alloy market followed the magnesium ingot futures weakness, continuing an overall pattern of weak supply and demand. On the supply side, leading magnesium alloy enterprises implemented a rotational maintenance model, keeping overall supply basically stable, but the operating rate of small and medium producers dropped significantly. On the demand side, magnesium alloy demand from the automotive sector held up relatively well, while demand from the two-wheeler sector shrank sharply, with a decline of nearly 50%. Although other application sectors showed some growth, the base was small and insufficient to offset the demand decline, leading to an overall weakening of industry demand. Dragged by this, magnesium alloy enterprises faced greater operational pressure, and processing fees ground lower.

2 Summary of the Week

This week, mainstream quotations for magnesium ingot in main producing areas were 15,800-15,900 yuan/mt, up 100 yuan/mt WoW, while FOB prices in the overseas market weakened in sync. The domestic market consolidated at lows overall, with smelting costs providing a bottom support that limited significant downside room. However, smelters' moods to hold back from selling eased somewhat, and low-priced supply appeared. Orders from downstream buyers and traders were insufficient, procurement was cautious, and trading was overall sluggish. In terms of foreign trade, overseas summer breaks had not yet ended, inquiries in the overseas market were scarce, and overseas pressure to push for lower prices was evident. Upstream, dolomite supply channels shifted, supply was sufficient, and raw material prices remained stable. Downstream, magnesium powder and magnesium alloy followed the magnesium ingot weakness, with magnesium alloy showing weak supply-demand and processing fees under pressure. In the short term, magnesium ingot lacked upward drivers, and it is expected to continue its sideways consolidation pattern.