SMM, October 22:
This week, the domestic magnesium ingot market showed a pattern of first falling and then rising. After a sustained pullback in the earlier period, 99.90% magnesium ingot (Fugu, Shenmu) dropped to a year-to-date low of 15,100 yuan/mt on October 21. The industry as a whole was already near the cost line, and smelters' willingness to hold prices firm and hold back from selling strengthened notably. Low-price selling converged, and low-priced spot cargo in the market contracted, driving magnesium prices to rebound from lows on October 22, with the daily average price rising 100 yuan/mt to 15,200 yuan/mt. However, this round of recovery was more of a phased game after an oversold decline, and the sustainability of the rebound still needs to be verified by the demand side.
Prices: Magnesium prices rebound from lows on the 22nd after a month-long decline
Spot market: Taking the average price trend of SMM 99.90% magnesium ingot (Fugu, Shenmu) as an example, after hitting a year-to-date high of 17,500 yuan/mt on April 8, the average price consolidated lower overall. The decline accelerated notably from September 22, and on October 21 it dropped to 15,100 yuan/mt, refreshing the year-to-date low. The current price is down 4.13% from 15,750 yuan/mt on December 31, 2025, and down 13.71% from the year-to-date high of 17,500 yuan/mt—all year-to-date gains have been erased.
The magnesium market has been in a downtrend over the past month. At the start of this week, the market continued the previous decline, with smelters proactively cutting prices to move shipments. Downstream end-users maintained a heavy wait-and-see sentiment, mostly purchasing only small rigid-demand orders. Some traders bought small volumes at lows and sold quickly, while end-user enterprises waited for suitable price levels to restock at opportune moments. As magnesium ingot prices approached the 15,000 yuan/mt round-number level, the industry as a whole was already near the cost line, and some enterprises were incurring losses. Magnesium plants in producing areas showed notably reduced willingness to sell, and low-price dumping basically disappeared. Combined with traders covering earlier orders, phased volume expansion in low-level buying, and small rigid-demand orders following in tandem, magnesium prices started to rebound from lows.
Reasons: Bottom support comes from costs and holding back from selling, while the upside bottleneck lies in weak demand
The support for this bottoming-out rebound mainly came from the supply side, with demand only providing phased cooperation. Pidgeon process primary magnesium production is highly dependent on raw materials such as ferrosilicon, semi coke, and electricity. After the sustained decline, the industry as a whole was already near the cost line, and some high-cost enterprises were incurring losses. Loss pressure constrained further price reduction space, and producers lacked the motivation to proactively cut prices to move shipments. Fugu and Shenmu, as core primary magnesium producing areas in China, have high capacity concentration and strong coordination in enterprise pricing. Once most holders hold back from selling and hold prices firm, spot circulation shrinks quickly, and low-priced cargo available in the market decreases, forming short-term spot support.
However, headwinds constraining the rebound's upside also exist. Downstream industries such as domestic magnesium alloys and die casting have not seen notable growth in overall industry orders. Downstream factories' finished product inventories are still being destocked, and purchasing strategies lean toward buying on demand and restocking in batches, with insufficient willingness for large-scale concentrated stockpiling. Although inquiries recovered during the week, actual order follow-through remained weak, and traders generally maintained a small-batch, fast-turnover approach, unwilling to stockpile continuously. From a total volume perspective, the industry's overall effective supply remains ample, and there has been no widespread or sustained production cuts. The medium and long-term supply-demand easing fundamentals have not materially changed.
Outlook: Short-term sideways movement likely, with focus on production cuts and end-user restocking pace
Overall, this rebound was a game-driven recovery after the previous sustained decline, the result of concentrated release of short-term contradictions, and does not represent a trend reversal. In the short term, supply-side price holding provides a floor, and room for deep declines is limited. However, the demand side lacks sustained volume expansion, and there is insufficient momentum to drive a one-sided price rally. Magnesium prices are most likely to consolidate in a narrow range. The watershed for the subsequent market will depend on two signals: on one hand, the intensity of smelter production cuts; on the other hand, the pace of downstream end-user restocking, and whether orders in the magnesium alloy and die casting industries can show marginal recovery, driving sustained actual order follow-through. At the same time, producer inventory destocking, raw material cost changes (coal, ferrosilicon, and semi coke prices directly determine magnesium plants' cost floor and price-holding intensity), and changes in export orders also need continued attention.
