A Turbulent Season! Stalemate in Supply and Demand Intensifies, Magnesium Prices Are Stagnanrt [SMM Analysis]

In early December, it can be described as a "turbulent season," with various news pouring in, leaving industry insiders overwhelmed. Affected by the supply-demand imbalance, magnesium prices continued to decline. As magnesium prices fell below the psychological expectations of magnesium ingot smelting enterprises, reports of production cuts and suspensions from smelting enterprises across provinces emerged one after another. Confidence in the market gradually recovered among industry participants. However, as magnesium prices "broke through" the 16,000 threshold and dropped to 15,900 yuan/mt, news of stockpiling and purchasing was released. While magnesium prices bottomed out and rebounded, the pace of production cuts and suspensions by magnesium plants also began to slow.

As the news of stockpiling and purchasing further fermented, downstream buyers and traders, after an initial phase of panic buying, gradually regained rationality. Amid the cold winds, market transactions became increasingly sluggish. Some magnesium ingot smelting enterprises had no choice but to lower prices to promote transactions, leading to an increase in low-priced supplies.

From the supply side, due to the decline in raw material prices such as coal and ferrosilicon, magnesium prices lacked support from raw material costs. Coupled with strong destocking demand on the supply side, weak downstream demand, and a strong wait-and-see sentiment, some magnesium plants have already experienced losses. Regarding the future trend of magnesium prices, enterprises that were already observing cautiously are expected to remain hesitant to make purchases. Downstream purchasing enthusiasm is expected to stay at a low level. SMM anticipates that magnesium prices will be stagnant in the future and will continue to monitor the subsequent trends in magnesium prices.