Magnesium Inventory Rises 1.33% MoM Amid High Prices and Reduced Supply Pressure

【SMM Weekly Magnesium Cost Briefing】From September 4 to September 10, the average production cost of magnesium ingots in Shaanxi province stood at RMB 16,084 per ton, down by around 6.1% week on week. The decline in cost was mainly driven by the drop in prices of raw materials. In terms of profits, the average profit of the industry this week came in at RMB 3 per ton, marking an overall turnaround from losses to profits, yet the profit margin is extremely thin, basically hovering around the break-even line, with an average profit margin of 0%. On the whole, the cost of magnesium ingots has dropped significantly this week. Affected by the falling magnesium prices, the recovery of industrial profits remains limited, and most manufacturers are still on the verge of slim profit or loss. The short-term cost support has somewhat weakened, thus continuous attention should be paid to the price trend of raw materials and the recovery of downstream demand.

【SMM Weekly Magnesium Output Flash Report】From September 4 to September 10, the weekly output of national sample magnesium plants decreased by 4.1% month-on-month, with the weekly operating rate standing at 73.44%. According to research, affected by rising raw material prices that have pushed up production costs, multiple primary magnesium enterprises announced maintenance this week. Among them, three primary magnesium smelting enterprises suspended production for maintenance and two reduced output, leading to a notable decline in magnesium ingot production. It is understood that the maintenance period for manufacturers this week is expected to be around 10 days, and primary magnesium output is projected to remain at a low level and move sideways next week.

【SMM Magnesium Flash】This week, the social inventory of magnesium ingots decreased by 3.2% month-on-month, showing a trend of destocking. At the beginning of the week, domestic magnesium ingot prices continued to rise. Downstream customers and traders exhibited a strong aversion to high prices, and there were no large-scale proactive stock-up operations. Only rigid demand transactions were maintained, and market trading was relatively weak. Against the backdrop of rising ex-factory prices for magnesium ingots and no substantial recovery in demand, traders took the initiative to clear early low-priced stockpiles. As a result, the inventory transitioned from the previous pattern of accumulation to destocking. The continuous release of low-priced supply suppressed magnesium prices, coupled with the market mentality of "buying when prices rise and not buying when prices fall," the market continued to operate under pressure.