SunSirs: Magnesium Prices Remained Stable, with Trading Weakly at Low Levels (December 22-26)

Price trend:

According to the commodity price analysis system of SunSirs, the magnesium ingot market in Shaanxi province experienced a slight decline last week (December 22-26). The average market price at the beginning of the week was 15,725 RMB/ton, and the average market price at the end of the week was 15,700 RMB/ton, a decrease of 0.16%.

Last week, the domestic magnesium ingot market saw limited overall fluctuations, with market prices mainly consolidating and stabilizing, maintaining a generally weak and stable trend. According to market research conducted on Friday, the mainstream factories in Fugu region continued to quote prices at 15,700 RMB/ton (including tax and cash payment), and other regional markets also maintained stable prices.

Supply and demand

On the supply side, the transaction price of magnesium ingots remained below the cost line for magnesium smelters for a considerable period. With rising coal prices, magnesium smelters were increasingly determined to raise prices, and some companies had even chosen not to quote prices at all. In addition, several magnesium smelters were planning to reduce production or shift to building new magnesium alloy production capacity.

On the demand side, overall demand remained relatively weak. Coupled with the continued appreciation of the RMB, the prices offered by the demand side did not align with the market realities. Downstream customers and intermediaries were not highly receptive to the price levels and were waiting for a more opportune time to make purchases, resulting in cautious overall purchasing behavior.

Raw materials

Due to the combined effects of continuously rising coal prices and falling semi-coke prices, the cost of magnesium smelting had further increased, exacerbating the losses of magnesium smelting enterprises.

Comprehensive analysis

The market recently remained under pressure, with significant discrepancies between supply and demand in terms of pricing. The coal prices were high, and transaction prices were insufficient to cover production costs. Under these circumstances, the pricing strategies of magnesium smelting companies will likely become even more divergent. It is expected that the stalemate in market prices will be effectively alleviated as magnesium alloy production capacity being gradually released.

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