The inventory growth of magnesium ingots exceeded expectations during CNY, pressuring magnesium prices [SMM Analysis]

At the beginning of the year, the mainstream market price of 90 magnesium ingots in the main production areas was 19,700-19,800 yuan/mt, which was 250 yuan/mt lower than the last working day before CNY. Judging from the magnesium ingot transactions in the past two days, the trading atmosphere is sluggish, and the domestic magnesium prices continued to fall.

The recent price reduction is a continuation of the overall market situation before the CNY. The destocking of magnesium ingots before the CNY is less than expected, coupled with continuous production of magnesium plants during the CNY to ensure the supply of raw materials for downstream customers, the spot supply of magnesium ingots is relatively loose; in terms of demand, after CNY, companies restocked depending on the inventory level of raw materials, and some downstream companies are still on CNY holidays. The oversupply continues, resulting in magnesium plants having weak bargaining power and magnesium prices falling under pressure. The price of 75 natural lump ferrosilicon in Shaanxi is running around 7,000 yuan/mt, which is the same as the price on the last working day before CNY holiday. At the beginning of the year, new orders have been limited recently, and there is a strong wait-and-see attitude in the downstream. Buyers and sellers are mainly purchasing on a trial basis, and ferrosilicon prices are expected to be mainly stable. According to coal companies in the main production areas, the price of 6000K pit coal in Yulin is 760 yuan/mt, and the price of semi coke in Shaanxi is about 950-1,000 yuan/mt. The prices are the same as on the last working day before the holiday. Some pit coal mines are resuming production. The mainstream of coal prices is mainly stabilizing, the transaction volume remains stable, and coal prices are expected to stabilize. Regarding the subsequent trend of magnesium prices, a large trader said that the current market has become one-sided. Companies that have been holding orders will be more cautious in entering the market after seeing that magnesium prices continue to decline after the CNY. The enthusiasm of downstream procurement will remain at a low level. SMM expects magnesium prices to remain weak in the short term.