Magnesium prices weakened in June. As of June 29, the mainstream transaction prices for 90 magnesium ingots in the main production areas were 17,900 yuan/mt, down 850 yuan/mt from the beginning of June.
[Magnesium ingot supply]
Currently, magnesium ingot smelting producers are generally maintaining normal production, but the market focus has once again shifted to the operating rates of smelting producers in the main production areas due to the strong supply and weak demand. The current weak demand forced magnesium prices down, increasing production pressure. Additionally, rising temperatures are worsening working conditions for workers, and some producers may plan maintenance schedules. However, considering that some magnesium ingot smelting producers just resumed production before the end of last year and some conducted maintenance in April, it is expected that there will be limited maintenance in the future, and the supply of magnesium ingots will remain relatively ample.
[Magnesium ingot demand]
Overseas market: Recently, the performance of North China ports has been relatively booming, with some areas experiencing a shortage of vessels, causing tight supply. Strikes at ports in Germany and France caused port congestion, and the Red Sea incident has led to ships taking longer routes, increasing time costs. It is expected that ocean freight rates on the Europe-America route may rise again in July. Additionally, with the arrival of summer season, the overseas summer break is coming as scheduled, and the overseas magnesium ingot market is entering a sluggish season. It is expected that magnesium ingot export volumes will remain low.
Domestic market: The aluminium extrusion industry has entered its traditional off-season. Few producers have seen a rebound in orders due to the decline in aluminium prices, failing to conceal the overall weakening demand. By segment, construction extrusion is relatively sluggish, while demand in the south China market remains stable. On one hand, there is significant demand for urban village renovation, driving orders for surrounding extrusion plants; on the other hand, there are many established extrusion plants in south China with stronger capabilities to secure orders. Industrial extrusion has also entered the off-season, with both photovoltaic and automotive extrusion showing weakening trends. However, compared to previous years, demand still maintains positive growth. Overall, the aluminium extrusion order volume and operating rate are experiencing a seasonal adjustment as the industry enters its traditional off-season.
[Magnesium Ingot Raw Material Situation]
At the beginning of June, the ferrosilicon market gradually returned to supply-demand balance as the previous stimulating factors faded. As of June 29, the price of 75 ferrosilicon natural lump in Shaanxi was 7,100 yuan/mt, down 1,100 yuan/mt from the beginning of June. Ferrosilicon futures were fluctuating downward, together with the traditional off-season demand, end-users restocked only as needed. The overall market performance was moderate, downstream stocking willingness was low, and market sentiment was cautious. Considering the declining price of raw material semi coke, the ferrosilicon market price is expected to remain weak at low levels.
Overall, the magnesium market prices were weak, with downstream end-user demand being sluggish and mainly driven by small-volume transactions based on rigid demand. As the current supply-demand pattern is difficult to change, the magnesium market price is expected to remain weak in July. SMM will continue to monitor downstream demand and market transaction conditions.
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