en.Wedoany.com Reported - Since early June, China's magnesium market has entered a supply-demand standoff, with intensified price negotiations between buyers and sellers. The EXW price of 99.9% purity magnesium ingots (Fugu, Shenmu) fluctuated within a range of 16,300–16,400 yuan/ton, with a notably narrowed trading band. End users' willingness to accept high magnesium prices has significantly declined, while smelters maintain profits through cost reduction, leaving magnesium prices trapped in a dilemma with limited upside or downside.
Detailed analysis shows a significant divergence in supply and demand in the primary magnesium market in early June. On the supply side, smelters in major production areas simultaneously increased output, driven by two factors: first, enterprises operating at full capacity to lower fixed production costs, thereby reducing the comprehensive cost per ton of magnesium ingots; second, integrated companies along the entire industrial chain maintaining production scale to ensure internal raw material self-use. This has led to a slight increase in overall industry capacity utilization, with total primary magnesium output in China expected to reach 108,600 tons in June. On the demand side, the off-season effect is evident, with high spot prices prompting a wait-and-see attitude in market procurement, limited to essential demand purchases, resulting in a generally subdued transaction atmosphere.
By sector, magnesium alloy plants maintained a moderate pace of raw material procurement, while magnesium powder processing and export orders weakened simultaneously. The overall market presents a pattern of strong supply and weak demand. End users' concerns over high prices continue to intensify, and in the absence of support from concentrated restocking, the upward momentum for magnesium prices remains weak.
Additionally, following the coal mine explosion in Shanxi at the end of May, prices of raw coal and semi-coke strengthened concurrently. Although rising prices of by-products such as coal tar partially offset gas costs, resistance to higher semi-coke prices has emerged, leading to a slight increase in overall gas costs for smelting. Since the second half of 2025, dolomite prices in the Wutai area of Shanxi have risen stepwise, significantly increasing smelters' procurement costs for high-quality dolomite, with continuous pressure accumulating on the raw material side.
Against the backdrop of simultaneous price increases for multiple raw materials, many magnesium smelters are currently approaching the breakeven point. Supported by sustained minimum cost levels, producers remain firm in maintaining existing prices.
Currently, the magnesium market faces multiple bearish factors. Producers' willingness to support prices and buyers' fear of high prices are fiercely confronting each other at the 16,300–16,400 yuan/ton level, making market direction difficult to predict.
Supply-demand pressure continues to intensify. Against the backdrop of weakening end demand, overall inventory at primary magnesium plants is accumulating, and the market pricing center is gradually shifting toward the demand side. However, there is a clear divergence in inventory structure: current producer inventory is mainly concentrated in leading enterprises with strong financial resources, with market-available circulating inventory accounting for only about half of total producer inventory.
The main pressure currently comes from daily surplus output generated by high operating rates at enterprises. As midsummer approaches, maintenance plans at primary magnesium plants are being implemented sequentially, and market attention is gradually shifting to expectations of supply reduction from production cuts. The current market is in a fragile balance between oversupply and weak demand.
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