The imbalance of strong supply and weak demand is hard to change, and magnesium prices continue to fall [SMM Analysis]

Affected by the continuous weakness in the prices of raw material ferrosilicon, coupled with factors such as insufficient downstream orders leading to low purchasing enthusiasm, the overall magnesium market is in a stalemate with a weak trend. As the month is about to end, some magnesium ingot smelters have appropriately released some low-priced orders to alleviate financial pressure. However, mainstream factories are not strongly inclined to lower prices due to production cost factors. Downstream end-use demand remains weak, with customers mainly replenishing inventories based on immediate needs, and price suppression is quite evident. Intermediaries' operational enthusiasm is also relatively low, and the market is mostly cautious and observant. As of the time of writing, the mainstream transaction prices for 90 magnesium ingots in the main production areas are 17,450-17,550 yuan/mt.

[Magnesium Ingot Supply and Demand Situation] As the month is about to end, the expected peak season of "September-October" is gradually falling short, and the imbalance of strong supply and weak demand is hard to reverse in the short term. The stalemate in the magnesium market is likely to continue. Weak downstream market demand results in low purchasing motivation, and a strong sentiment of caution prevails. Magnesium prices lack upward momentum, and the price-maintaining policy implemented for nearly a month in September has made industry insiders more aware of the current downstream demand situation in the magnesium market. Intermediaries' operational enthusiasm remains low, and the market is mostly cautious and observant, making it difficult for the weak magnesium market trend to improve, with bearish sentiment continuously spreading within the industry.

[Magnesium Ingot Raw Material Situation] As of the time of writing, the mainstream ex-factory prices for 75 ferrosilicon in Fugu, Shaanxi are 6,700-6,800 yuan/mt. The ferrosilicon market demand has not significantly improved, and the ferrosilicon market is expected to fluctuate rangebound in the short term. SMM analysis indicates that considering the recent alleviation of financial pressure on magnesium ingot smelters and the magnesium price reaching the important period of 17,500 yuan/mt again, the sentiment to stand firm on quotes among magnesium ingot smelters is expected to recover in the short term. The short-term magnesium ingot market prices are expected to remain stable, and SMM will continue to monitor downstream demand and market transaction conditions.