China's Magnesium Market Retreats after Rapid Rise, Foreign Trade Transactions Remain Weak [SMM Magnesium Weekly Review]

1. Market Review

1. Dolomite

This week, the EXW price (excluding tax) for 1-3 cm dolomite from Wutai was 128 yuan/mt, flat WoW. The EXW price (excluding tax) for 2-4 cm dolomite from Wutai was 158 yuan/mt, also flat WoW.

Overall, delivered prices for dolomite remained stable this week. The leading dolomite mine in the Wutai area was in a long-term suspension. Primary magnesium smelters in the main production area were gradually shifting their dolomite procurement channels to other markets. The EXW quotations from other regions offered certain advantages compared to the original Wutai supply. However, there were shortcomings in local logistics infrastructure. The freight cost allocated to the cargo accounted for a high proportion. After deducting the freight differential, the actual delivered-to-plant prices for enterprises edged down. Currently, mainstream delivered quotations for dolomite in the market stayed within the range of 180 to 200 yuan/mt.

1.2.1 Magnesium Ingot (Fugu, Shenmu - Main Production Area)

Magnesium prices were in the doldrums this week. As of press time, mainstream quotations for 99.90% magnesium ingot in the main production area were 15,700-15,800 yuan/mt, down 150 yuan/mt WoW.

China’s magnesium ingot market retreated after a rapid rise this week, with overall prices weakening under pressure. Early in the week, the market extended the previous week's uptrend, with quotations holding firm at 15,900 yuan/mt. Smelters held prices firm, supported by expectations of tighter supply due to production halts and maintenance in the main production area. However, downstream die-casting and alloy enterprises had sufficient pre-stocked inventories. End-users mainly purchased as needed, and their willingness to buy at high prices remained low, causing market transactions to gradually turn sluggish. Smelters began to face pressure to ship material, and some producers lowered their selling prices to recoup funds. Magnesium prices then declined continuously from the 15,900 yuan/mt mark, entering a downward channel, and prices stabilized at a low level later in the period. Overall, the bullish impact of supply-side maintenance had been fully digested. Downstream high inventory levels and fear of high prices were the core suppressing factors. The market saw a strong-then-weak trend over the whole week.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, China’s FOB price was quoted at $2,220-2,350/mt, with an average price of $2,285/mt. The magnesium ingot export market saw quotations initially fall before stabilizing, consolidating narrowly in response to the decline in domestic EXW prices.

Overall, export quotations for magnesium ingot were slightly weak in a narrow range this week. Early in the week, inventory pressure on producers persisted, and their willingness to hold prices firm weakened. Some producers proactively lowered prices to facilitate deals, while others held onto higher prices, with actual transactions concluded at various price points, causing spot trades to recover somewhat. However, the overall export performance was sluggish. Traditional off-season demand and geopolitical factors resulted in scarce new orders, leaving only a small amount of just-in-time procurement. Downstream buyers pushed for lower prices, and their willingness to restock was low. High ocean freight rates combined with exchange rate fluctuations further squeezed export profits. Most traders adopted a wait-and-see sentiment after adjusting prices. Export quotations for this week followed the domestic EXW price trend, falling initially and then stabilizing. In the short term, they are expected to continue consolidating narrowly, tracking magnesium ingot prices.

1.3 Magnesium Powder

This week, the mainstream EXW price (tax included) for 20-80 mesh magnesium powder in China was 16,950-17,050 yuan/mt. China's FOB price was $2,395-2,495/mt.

The magnesium powder market first fell and then stabilized, tracking magnesium ingot this week. Early in the week, EXW prices for the raw material, magnesium ingot, weakened narrowly, pulling magnesium powder quotations down accordingly. End-use demand remained sluggish as traditional downstream steel mill desulfurization and titanium sponge enterprises entered their off-season. Apart from small amounts of just-in-time procurement, downstream manufacturers generally exhibited low willingness to stockpile or restock, mostly adopting a wait-and-see sentiment, and overall market transactions were sluggish. In the short term, magnesium powder prices are expected to continue consolidating narrowly, following magnesium ingot price movements.

1.4 Magnesium Alloy

This week, the mainstream EXW price (tax included) for magnesium alloy in China was 17,750-18,050 yuan/mt, and the mainstream FOB price was $2,595-2,675/mt.

Raw material magnesium ingot prices retreated after a rapid rise this week, and these raw material fluctuations caused the magnesium alloy market to be under pressure overall. Polarization was very evident on the supply side. Operations at leading magnesium alloy enterprises remained stable. Small and medium-sized processing plants faced significant finished product inventory buildup, and bottom-tier enterprises opted for production halts and maintenance. Multiple magnesium alloy producers in the Shaanxi region concentrated on production cuts. Overall spot supply in the market narrowed MoM. On the demand side, the market entered the traditional high-temperature off-season. Downstream die-casting processing enterprises conducted large-scale shutdowns for maintenance, causing the scale of supporting orders to shrink significantly. The industry’s fundamental oversupply situation saw no substantial improvement. The market was squeezed by two-way factors: upstream magnesium ingot raw material costs pushed total production costs higher, while persistently weak downstream end-use demand prevented the transmission of price hike pressure. Under the combined influence of multiple factors, magnesium alloy processing fees remained under pressure and moved lower.

2. Weekly Summary

The magnesium ingot market in the main production area retreated after a rapid rise this week. Early in the week, maintenance benefits supported quotations. However, high downstream inventories and fear of high prices suppressed transactions. Some producers reduced prices to facilitate sales, and magnesium prices weakened under pressure. FOB prices at Tianjin port passively followed the decline in domestic EXW prices. Overseas demand was sluggish due to the summer break, and high ocean freight rates inhibited transactions. Dolomite prices were stable, providing limited cost support. Magnesium powder and magnesium alloy prices first fell and then stabilized, tracking magnesium ingot. Downstream steel desulfurization, titanium sponge, and die-casting enterprises entered an off-season, resulting in sluggish transactions. The oversupply pattern remained unchanged. In the short term, the magnesium market will continue to consolidate narrowly.