This week (6.22-6.26), the magnesium ingot market in Shaanxi region fell, with an average market price of 16250 yuan/ton at the beginning of the week and 15950 yuan/ton at the end of the week, a decrease of 1.85%.
The following analysis is based on fundamentals:
Supply and demand side
The pressure on the supply side has not decreased, and the operating rate in the main production areas remains high. Some manufacturers have actively increased production to dilute fixed costs, further increasing market supply. The supply increment continues to release, and the pressure on factory shipments continues to increase.
The demand side is showing signs of fatigue, with domestic terminals only maintaining a small amount of procurement for essential needs, limited inquiries from intermediaries, and insufficient willingness to purchase in bulk. The export side is even more severe, with a significant increase in international shipping costs and the strengthening of the RMB exchange rate. The competitiveness of domestic magnesium ingot exports has significantly declined, and overseas buyers are becoming more cautious, resulting in a scarcity of new orders. Under the dual suppression of internal and external demand, the market as a whole continues to experience a continuous downward trend.
Raw material end
Marginal weakening of cost support. Previously, magnesium prices received cost support around 16300 yuan/ton, mainly due to factories reaching the loss line and strong willingness to raise prices. But this week’s drop in the price of thermal coal further weakened the support of the cost side. When cost support is no longer strong, a downward breakthrough in prices becomes inevitable.
integrated forecasting
The current magnesium market is under triple pressure of “loose costs, high supply, and freezing demand”. In the short term, factory inventory has exceeded historical highs. If inventory continues to accumulate, companies may be forced to further sell at lower prices. The only potential positive factor is that, against the backdrop of the continued widening price difference between magnesium and aluminum, the substitution logic of magnesium alloys in areas such as automotive lightweighting is strengthening. However, this is a medium – to long-term structural change that is difficult to hedge against the short-term downward pressure caused by the current supply-demand imbalance. It is expected that magnesium prices will continue to maintain a weak and volatile pattern in the short term.
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