Magnesium Ingot Market Bottoms Out, Off-Season Demand Under Pressure Drags on Price Rise [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

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

Delivered dolomite prices remained stable this week. Due to the prolonged shutdown of leading dolomite mines in Wutai, magnesium smelters in the main producing regions gradually shifted their procurement channels to Shiyan in Hubei, Datong in Shanxi, and Hebi in Henan. EXW quotations from these regions were lower than those from Wutai, but with inadequate logistics infrastructure, the freight cost allocation was relatively high. After netting off, overall delivered prices edged down, with the mainstream delivered price range in the market at 180-200 yuan/mt.

1.2.1 Magnesium Ingot (Fugu, Shenmu - Main Producing Regions)

This week, magnesium prices were in the doldrums. As of press time, mainstream quotations for 99.90% magnesium ingot in the main producing regions were 15,850-15,950 yuan/mt, up 100 yuan/mt WoW.

This week, China's magnesium ingot market bottomed out, with overall prices holding up well. At the beginning of the week, news of maintenance shutdowns at several primary magnesium smelters in main producing regions spread, and smelters' willingness to hold prices firm strengthened notably. Market quotations were the first to stop falling and stabilize. As speculative demand gradually emerged, idle capital entered the market for purchases, boosting spot trading volume, and magnesium prices saw a rebound, with mainstream EXW quotations rising from 15,700 yuan/mt to a range of 15,900-16,000 yuan/mt. However, high downstream end-user inventories and growing fear of high prices on the buying side suppressed further price rises. Over the week, the market showed a pattern of initial stability, then a rally, but struggled to rise.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, China FOB prices were quoted at $2,250-2,360/mt, averaging $2,305/mt. The magnesium ingot export market saw a slight overall recovery, and driven by EXW prices, China FOB prices drifted higher.

This week, export quotations for magnesium ingot overall edged higher. Domestic EXW prices drifted higher, dragging up Tianjin port FOB quotations accordingly. However, markets outside China were in the traditional off-season demand period, compounded by the summer break, resulting in scarce new inquiries. Persistently high ocean freight rates also suppressed export transactions, and weak demand capped the upside for magnesium prices. Although export quotations were raised passively along with domestic EXW prices, actual demand failed to follow, and buyers and sellers remained in a stalemate, taking a wait-and-see approach. In the short term, without a concentrated release of export orders, FOB prices are expected to move sideways.

1.3 Magnesium Powder

This week, the mainstream EXW price including tax for 20-80 mesh magnesium powder in China was 17,100-17,200 yuan/mt; the China FOB price was $2,415-2,515/mt.

This week, the magnesium powder market drifted higher following magnesium ingot. Raw material magnesium ingot prices bottomed out, driving magnesium powder EXW and FOB quotations to recover. However, traditional demand for magnesium powder both in and outside China was in the seasonal off-season, with some sectors even seeing slight contraction. Overall sluggish demand led to scarce orders and sluggish transactions. In the short term, magnesium powder prices are expected to continue to move sideways in line with magnesium ingot.

1.4 Magnesium Alloy

This week, the mainstream EXW price including tax for magnesium alloy in China was 17,900-18,200 yuan/mt, and the mainstream China FOB price was $2,615-2,695/mt.

This week, magnesium alloy market followed the strength of raw material magnesium ingot. On the supply side, leading magnesium alloy producers maintained stable operations, but small and medium-sized manufacturers faced severe inventory backlogs, and tail-end enterprises were forced to shut down for maintenance due to insufficient orders, causing overall market supply to narrow MoM. On the demand side, as the high-temperature off-season set in, many die-casting processing enterprises halted for maintenance, leading to a significant contraction in magnesium alloy downstream orders. The market remained oversupplied. With rising raw material costs and weakening downstream demand, magnesium alloy processing fees remained under pressure.

2 Weekly Summary

This week, maintenance shutdowns at smelters in the main producing regions boosted producers' sentiment to hold prices firm. Coupled with the release of speculative demand, spot prices recovered. However, high downstream inventories and cautious buying led to a struggle for prices to rise further. Tianjin port magnesium ingot FOB prices averaged $2,305/mt, recovering slightly in tandem with domestic prices. However, the overseas market was in the summer break off-season with sluggish demand, and export trading was muted. Dolomite prices remained stable, providing limited cost support. Magnesium powder and magnesium alloy followed the uptick, but downstream demand was low in the off-season. In the short term, the magnesium market as a whole is expected to move sideways.