Production and Inventory Briefing
1.1 Weekly Production
From August 7 to August 13, weekly production at sample magnesium plants nationwide was 22,538 mt, with a weekly operating rate of 73.35%, up 1.91% WoW. According to the survey, several smelting producers in major primary magnesium producing areas have already resumed normal production, driving primary magnesium output in the market into a steady uptrend. As more magnesium smelters gradually achieve stable and full production, total primary magnesium supply is expected to continue its sustained growth.
1.2 Weekly Inventory
1. This week, primary magnesium smelter inventories fell 2.20% WoW, and primary magnesium market inventories overall showed a continued pullback. This round of inventory decline was driven mainly by two factors. On the one hand, although more producers in major primary magnesium producing areas resumed production this week and total industry output edged up, the pace of resumption was relatively gradual, overall output growth was limited, and new supply provided only weak replenishment to inventories. On the other hand, downstream traders carried out concentrated restocking, while previously pending delivery orders were fulfilled in a concentrated manner. Overall market trading activity improved noticeably, and large amounts of spot cargo at plants were absorbed, directly driving rapid destocking of plant inventories. Looking ahead, as the pace of resumption at magnesium smelters continues to accelerate, total primary magnesium output will expand further, and supply-side pressure in the market will gradually build. At that point, magnesium plant inventories are likely to end the current downward trend and stop falling and rebound.
2. This week, magnesium ingot social inventory rose 3.57% WoW, showing a slight inventory buildup. Magnesium ingot prices were initially stable and then strengthened this week, mainly due to stronger cost support—coal and ferrosilicon prices continued to move higher, lifting producers' sentiment toward holding prices firm and weakening market expectations of price declines. Meanwhile, as some orders approached delivery periods, traders carried out staged stockpiling purchases this week. However, of the cargo purchased by traders this week, only a small amount directly flowed to China's downstream end-users, while most was held in inventory for delivery demand in mid-to-late August. It was this pace mismatch of “front-loaded procurement and delayed warehousing” that caused social inventory data to accumulate this week. Overall, the current inventory buildup was driven more by temporary stockpiling than by a substantive recovery in end-use demand. Going forward, attention still needs to be paid to how cost-side trends and delivery pace will further affect inventory changes.
