Downstream demand is sluggish and magnesium prices continue to weaken

At the beginning of the year, the magnesium market continued the downturn before the Spring Festival. The bearish sentiment spread in the market. Downstream companies that were not eager to replenish their stocks generally chose to wait and see. The transactions in the magnesium market appeared even more deserted. The center of magnesium ingot market transactions gradually shifted downward. Due to the large backlog of inventory during the Spring Festival, magnesium factories chose to lower prices at the beginning of the week. As the magnesium factory adjusted prices for shipments, the market trading volume did not improve as expected. Magnesium prices continued to decline after a brief stabilization on Thursday. As of this Friday, the mainstream market transaction price of 90 magnesium ingots in the main production areas was between 19,600 and 19,700 yuan/mt, down 400 yuan/mt WoW.

In terms of downstream demand, some aluminum plants said that the consumption of raw materials after the holiday was not as fast as expected, and raw material procurement plans may be delayed; some magnesium alloy companies said that due to the sluggish terminal demand during the Spring Festival, production was reduced to varying degrees, and it is expected that the short-term situation will be difficult to improve; The dealer said that the FOB price of overseas orders fell rapidly this week, and the FOB price of some overseas orders for 90 magnesium ingots was $2,750/mt, which was $50/mt lower than at the beginning of the week.

Against the background of the sharp decline in magnesium prices, purchasers are generally more cautious, resulting in a tepid trading volume in the magnesium market. SMM analysis shows that there is currently a lack of good news in the magnesium market. Considering the sluggish demand for overseas procurement, there is a strong wait-and-see mood in the downstream, and the industry's mentality is unstable, and it is bearish on the market outlook. At present, the magnesium price is close to the factory cost line, and it is difficult to explore the price downward. If the price continues to fall in the later period, some companies are expected to reduce production. Therefore, the short-term magnesium ingot prices are expected to fall.