[SMM Magnesium Market Analysis: Coal Cost Transmission Imbalance, Weakened Integrated Cost Advantages, and Continued Convergence of Regional Magnesium Ingot Cost Gaps] Recently, energy cost fluctuations in the magnesium industry far exceeded ferrosilicon price fluctuations. The influence of coal prices on magnesium prices increased significantly, and the cost structure of magnesium ingots underwent a notable shift.

SMM May 25 News: Driven by rising market expectations for coal policy changes and concerns over tightening supply, bullish sentiment was released in a concentrated manner. Coking coal and coke futures hit the daily limit up on May 25 and remained locked at the limit. As of the close of the daytime session on May 25, the most-traded coking coal and coke futures contracts were locked at the daily limit with gains of 7.97% and 7.99%, respectively. The limit-up moves in coking coal and coke lifted the broader ferrous metals and related raw material sectors, with the ferrosilicon continuous most-traded contract rising 3.97% on May 25. Supported by the strengthening prices of raw materials such as coal and ferrosilicon, magnesium ingot prices moved higher, with magnesium ingots gaining over 2% in a single day on May 25. Bullish sentiment in the market had already begun to emerge last Sunday. Rising Coal and Ferrosilicon Prices Highlight Cost Support for Magnesium Ingots Spot market: Primary magnesium smelting is highly dependent on raw materials such as coal and ferrosilicon, with a clear cost transmission chain. As coal prices continued to rise, cost pressure on upstream magnesium enterprises increased significantly. Some upstream enterprises reported that they had already raised their quotations to 16,700 yuan/mt last Sunday. On May 25, although morning inquiries were lukewarm, supported by the rigid cost underpinning from rising raw material prices, most producers still held firm at 16,700 yuan/mt, with a strong willingness to hold prices firm. By region, magnesium ingot prices across China were generally raised by 350 yuan/mt. Mainstream quotations for magnesium ingots (9990) in Fugu, Shenmu, and Inner Mongolia were 16,700 yuan/mt, while quotations in Wenxi were 16,900 yuan/mt. Currently, relevant policies for the coal mine market have not yet been officially implemented. The industry as a whole maintains a cautious wait-and-see stance, and the pace and impact of subsequent policy implementation deserve close attention. Outlook Looking at this round of magnesium price increases, the core driving factor was the rise in raw material costs such as coal and ferrosilicon, representing a typical cost-push price increase rather than one driven by improvements in supply-demand fundamentals. From the current magnesium market fundamentals perspective, the overall oversupply pattern has not shown significant improvement. Although downstream demand demonstrated a certain degree of resilience, end-use demand showed no notable incremental growth, while supply within the market also showed no obvious contraction, leaving fundamentals lacking strong upward support. Overall, the short-term raw material price increases effectively underpinned magnesium prices, supporting magnesium prices to hold up well. However, constrained by the weak supply-demand pattern, the rebound room for magnesium prices in this round is relatively limited. Going forward, it is essential to continue closely monitoring price fluctuations in coal and ferrosilicon raw materials and the implementation of coal mine-related policies, while paying close attention to the release of downstream demand and changes in market supply, in order to assess the pace and upside room for subsequent magnesium price movements. Recommended Reading:

[SMM Magnesium Morning Meeting Summary: Magnesium Ingot Trading Sluggish and Stagnant, Magnesium Product Prices Generally Stable] Magnesium ingot quotations remain stable, trading is sluggish, inventory is divergent, downstream rigid demand is insufficient, and the market is in a stalemate. Magnesium alloy prices are stable, with tight supply-demand balance supporting firm processing fees; magnesium powder prices are slightly raised due to raw material support, but order follow-up is limited, and domestic trade procurement is mostly postponed to March.

[SMM Magnesium Morning Conference Summary: Domestic Magnesium Market Remained Stable Before Chinese New Year, Primary Magnesium and Magnesium Alloy Prices Stabilized in the Short Term] Yesterday, domestic primary magnesium market quotations remained stable. As the Chinese New Year approached, smelters showed a weak willingness to sell. Pre-holiday stockpiling for domestic trade was largely completed downstream, and spot transactions were sluggish, with most deals being futures orders. In foreign trade, forward tender orders for delivery by the end of March had already been initiated in the first half of the month. It is expected that primary magnesium prices will remain stable within the range of 16,400 yuan/mt before the Chinese New Year. Magnesium alloy market prices were also steady, with mainstream tax-inclusive ex-factory prices at 18,600-18,800 yuan/mt and FOB prices at $2,600-2,650/mt. Enterprises had completed raw material stockpiling and maintained normal production, while downstream die-casting and end-users were gradually entering holidays. Market supply and demand maintained a tight balance, and short-term price stability is expected to continue.

[SMM Magnesium Morning Meeting Summary: Supply Divergence Leads to Transaction Decline, Strong Cost Support Keeps Prices Firm] Last week, magnesium prices fluctuated rangebound. Divergence among enterprises on the supply side led to a slight decline in transactions, while losses in semi coke pushed up smelting costs, forming strong support. Underpinned by costs, magnesium prices remained generally firm overall.

[SMM Magnesium Morning Meeting Summary: Divergence in Raw Material Prices, Magnesium Ingot and Downstream Products in the Doldrums] Supply side, some dolomite mines in Wutai, Shanxi, continue to suspend production, and the supply-strong, demand-weak pattern of ferrosilicon persists. Demand side, domestic rigid demand provides limited support, with European summer breaks leading to weaker procurement and significant price-driving-down in the Asian market. Overall, under the combined impact of production resumption expectations and the off-season during summer breaks, the magnesium market is expected to maintain a weak pattern in the short term.