The magnesium ingot market in Shaanxi region has declined, with an average market price of 15100 yuan/ton as of the end of the month and 15750 yuan/ton at the beginning of the month, a decrease of 4.13%.
This month’s market analysis
In October, the overall domestic magnesium ingot market showed a significant weak downward trend. Due to the sustained weakness in demand and the pessimistic spread of market sentiment, magnesium prices have been fluctuating downwards since the beginning of the month. However, the deep “V” rebound of the “moving average” indicator at the end of the month and the slight pullback in prices suggest that the market has encountered strong cost support and demand for oversold repair in the process of bottoming out.
Fundamentals:
On the supply side: Some production enterprises that were previously scheduled to suspend production for maintenance have gradually completed maintenance and resumed production, and the supply of goods has steadily increased. Coupled with the lack of new centralized production restrictions and production cuts, the market’s available spot resources have gradually accumulated, and the overall spot supply is relatively abundant, leading to an increase in supply pressure.
On the demand side, downstream processing industries such as aluminum alloys, die-casting, and sponge titanium continue to be under pressure, with insufficient increase in end consumer orders, low production enthusiasm of downstream enterprises, and industry operating rates remaining at a low level. Against the backdrop of weak prices, downstream procurement is cautious and generally follows the operational strategy of “buying up and not buying down”, only maintaining the need to replenish inventory, with weak willingness to actively stock up. The overall trading atmosphere in the market is light, and actual transactions are mostly scattered small orders, with few large-scale transactions occurring.
Cost side: Although there have been some fluctuations in the prices of core reducing agents and energy such as ferrosilicon and coal recently, they have remained relatively high overall. The current magnesium price is approaching the breakeven line of some high cost factories, and the extreme compression of profit margins has weakened the willingness of manufacturers to continue to significantly reduce prices. The bottoming out effect on the cost side is gradually emerging.
Future forecast
The current magnesium market is in a critical game period of “destocking and bottoming out”. In the short term, the weak macro sentiment and sluggish downstream demand will continue to suppress the high rebound of magnesium prices; However, considering that the extreme deviation of the mean difference indicator has been repaired and the cost support line is close at hand, it is expected that the possibility of a significant drop in magnesium prices next week is relatively small. The market is likely to bottom out with a narrow range of fluctuations in the price range of 15000-15300 yuan/ton. It is recommended that downstream enterprises moderately replenish their essential inventory at low prices, while upstream manufacturers need to pay attention to fluctuations in raw material prices and their own inventory levels to avoid blind selling.
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