1 Market Review
1 Dolomite
This week, the ex-factory price, excluding tax, for 1-3 cm dolomite (Wutai) was 108 yuan/mt, flat WoW; the price for 2-4 cm dolomite (Wutai) was 138 yuan/mt, flat WoW.
Domestic dolomite prices held steady this week. Supply side, on January 4, leading dolomite producers in the Wutai region announced production and sales suspensions, leading to a slight decrease in dolomite production in the Wutai area. Supply of high-quality dolomite was tight in the market, with dolomite from Ordos and Shiyan, Hubei supplementing the market supply gap. Demand side, the operating rate of primary magnesium plants slightly decreased, leading to a slight decrease in market demand. However, the current operating rate of magnesium plants remained higher than the same period last year. The supply-demand relationship in the dolomite market was expected to gradually shift towards a tight balance, and dolomite prices were anticipated to hold up well.
1.2 Magnesium Ingot
1.2.1 Magnesium Ingot (Fugu, Shenmu - Main Production Areas)
Magnesium prices held up well this week. As of press time, the mainstream transaction price for 99.90% magnesium ingot in the main production areas climbed to 16,800 yuan/mt, with leading producers raising their offers to 17,000 yuan/mt. The mainstream transaction price was raised by 1,100 yuan/mt compared to last Thursday.
Magnesium prices climbed steadily with surprising momentum this week. Looking back, non-ferrous metal futures surged significantly, which boosted market sentiment for magnesium ingots. Coupled with strong price-holding sentiment among magnesium plants and a distorted inventory distribution in the market, available circulating supply was scarce. Market transactions had to be conducted with limited magnesium plants, briefly creating an illusion of undersupply in the market fundamentals. Subsequently, market prices climbed step by step.
1.2.2 Magnesium Ingot (Tianjin Port - FOB China)
This week, the Chinese FOB price was quoted at $2,360-2,440/mt, with an average price of $2,400/mt. There was almost no new order increment in the overseas trade market this week, and offers followed the increase in domestic ex-factory prices.
Overseas market trading was generally stable this week. After returning from the holiday, overseas buyers generally adopted a wait-and-see attitude towards the market, with limited acceptance of price increases. The main reason was that a large number of orders had been released in advance before the holiday, and end-user inventory was at high levels. End-use demand in January was expected to see no significant increase. Overseas traders still had some orders pending execution; European traders' orders might not have been fully released, and some domestic traders also had a small number of pending shipment orders requiring restocking purchases. This provided some demand support for magnesium plants in the main production areas to hold prices firm. FOB export prices were expected to follow domestic ex-factory prices and remain high. However, due to low actual trading activity, the market presented a situation of high offer prices but limited actual transaction volumes.
1.3 Magnesium Powder
This week, the mainstream tax-included ex-factory price for Chinese magnesium powder (20-80 mesh) was 17,800-18,000 yuan/mt; the Chinese FOB price was $2,520-2,600/mt.
This week, magnesium powder market prices continued to rise driven by raw material costs. In actual transactions, downstream players generally adopted a wait-and-see attitude, with limited willingness for current essential demand to enter the market. Overseas orders were largely fulfilled last month, end-user inventories were high, and overall market trading stabilized. Magnesium powder producers continued to purchase raw materials as needed, maintaining a sales-based production strategy.
1.4 Magnesium Alloy
This week, China's mainstream tax-included ex-factory price for magnesium alloy was 18,750-18,950 yuan/mt, and the mainstream FOB price was $2,560-$2,620/mt.
Magnesium alloy prices continued to hold up well this week. Specifically, cost side, rising prices for both magnesium and aluminum pushed up raw material costs for magnesium alloy. Magnesium alloy producers raised processing fees this month, contributing to the firm price trend. Supply and demand side, magnesium alloy enterprises maintained stable operating rates, but order schedules for leading producers extended into February of the following year. Spot supply remained tight, and the supply-demand gap drove a steady climb in magnesium alloy processing fees.
2 Weekly Summary
This week, the magnesium market was characterized by sharply rising prices and a diverging supply-demand structure. Raw material side, production halts at leading dolomite producers in Wutai area tightened the supply of high-quality material, while primary magnesium producers' operating rates remained higher than previous years, pushing the dolomite market towards a tight balance. The transaction price for 99.90% magnesium ingot in major producing regions surged to 16,800 yuan/mt, up 1,100 yuan WoW, primarily driven by tight circulating supply, producers holding prices firm, and positive sentiment in the non-ferrous metals sector, creating a temporary undersupply situation. FOB offers followed the increase to $2,360-$2,440/mt, but new overseas orders were scarce, resulting in limited confirmed transactions. Magnesium powder and magnesium alloy prices also strengthened in sync with cost pressures; magnesium alloy processing fees continued to rise due to order schedules extending to February next year and tight spot supply. Overall, the current rally was driven by multiple factors including supply structure, costs, and sentiment, but strong downstream caution and limited actual demand support may test the sustainability of these high price levels.
