Weak market suppresses purchasing willingness across multiple fronts, vicious cycle hinders magnesium market recovery [SMM magnesium ingot spot report]

【SMM Weekly Magnesium Output Express】From October 9 to October 15, the weekly output of national sample magnesium plants reached 22,176 tons, with a weekly operating rate of 72.76%, a month-on-month decline of 0.88%. According to research, a total of two primary magnesium smelting enterprises suspended production for maintenance and one primary magnesium smelting enterprise reduced output during the National Day holiday. However, the reduction brought by the current magnesium plants has been offset by the increment from other magnesium plants that increased output. The overall production reduction of magnesium plants is negligible, which is insufficient to alleviate the current pattern of oversupply. According to SMM, a number of primary magnesium smelting enterprises in major producing regions currently have maintenance plans again due to the inversion of cost and price, and the subsequent primary magnesium output is expected to decline.

【SMM Weekly Magnesium Cost Briefing】From October 10 to October 16, the average production cost of magnesium ingots in Shaanxi province stood at 15,679 yuan/ton, up by around 1.73% week on week. In terms of profits, the industry posted an average loss of 379 yuan/ton this week, with the negative margin between magnesium price and production cost widening markedly. The underlying reasons are as follows: For one thing, the one-sided decline and sharp slump of magnesium prices after the holiday directly erased the remaining profit margins, pushing manufacturers deeper into negative profits. For another, the cost side also exerted simultaneous pressure: the transaction average price of Hongliulin lump coal this week came in at 1,048.77 yuan/ton, an increase of 22.34 yuan/ton from the previous period, while the price of semi-coke remained largely stable. The price hike of lump coal failed to be effectively passed through, exacerbating losses for semi-coke producers and further driving up the cost of magnesium ingots. In the short term, under the dual squeeze of persistently weak magnesium prices and high raw material costs, there remains a lack of support for magnesium plants to restore profits, and the current inverted price-cost situation is likely to persist.

【SMM Magnesium Flash】On October 13th, the European Commission granted the strategic project status of the key raw material bill for the processing link of the Verde Magnesium Industries project in Romania. Together with the previously approved mining link, this project has become the only one in Europe to obtain CRMA strategic status across the entire value chain of primary magnesium. Its phased production roadmap shows that the annual production target is set at 360 tons in 2028, increasing to 30,000 tons in 2031, and further expanding to 90,000 tons in 2036. With the establishment of strategic status across the entire chain, the construction of local primary magnesium supply capacity in Europe is expected to accelerate.