Magnesium Ingot in the Doldrums, Demand Suppresses Rebound Space [SMM Magnesium Weekly Data]

Production and Inventory Briefing

1.1 Weekly Production

From July 31 to August 6, weekly production of magnesium smelters nationwide in the sample stood at 21,940 mt, with a weekly operating rate of 71.98%, down 0.90% WoW. Our survey shows that two more primary magnesium smelters initiated maintenance shutdowns this week. Combined with ongoing production cuts at enterprises already under maintenance, the production growth from resumptions could not offset the decline caused by maintenance, leading to a further slight MoM pullback in total primary magnesium production this week. Looking ahead to next week, as several smelters plan to resume production, primary magnesium output is expected to see a minor rebound.

1.2 Weekly Inventory

1. Primary magnesium smelter inventory was basically flat WoW, with a clear divergence in inventory structure. Small and medium-sized smelters actively sold at prevailing market prices, keeping inventories low; some large smelters showed strong inclination to hold back from selling, resulting in a notable climb in their inventories. Overall, with primary magnesium production at a low level, supply pressure has eased, and combined with purchases by downstream and traders, no overall inventory buildup emerged in the market.

2. Social inventory fell 4.0% WoW, showing continued destocking. This week, magnesium ingot prices drifted lower, downstream new orders and ex-China demand showed no significant recovery, and traders' purchasing and stockpiling sentiment remained low. The market lacked growth driven by new orders overall. However, a small volume of spot rigid demand orders from downstream and traders were closed. Against the backdrop of sluggish market trading, this demand did not translate into new procurement but was fulfilled mainly by digesting existing inventories. Meanwhile, the supply side was impacted by ongoing maintenance and losses, with limited new spot cargo flowing into the market, further driving the gradual destocking of social inventory.