According to the monitoring of the analysis system, the magnesium ingot market in Shaanxi region is on the rise, with an average market price of 17500 yuan/ton as of now, and an average price of 16750 yuan/ton at the beginning of the month, an increase of 4.48%.
This month’s market analysis
This month, magnesium prices have shown a strong upward trend in a stepped manner of “narrow bottoming, sideways accumulation, and accelerated rise”, with a cumulative increase of 700 yuan/ton throughout the month, setting a new monthly high. This market trend is mainly driven by three factors: the resonance of technical trends, the bottoming out of raw material costs, and the tight supply-demand balance pattern.
Magnesium prices have emerged from a standard three-step upward trend, with no effective break through correction. The price has been running above the 10 day, 20 day, 30 day, and 60 day moving averages throughout the entire period, forming a complete bullish alignment at the end of the month, and a clear medium – to long-term upward trend.
Next, from the beginning, middle, and end of this month, we will conduct a segmented and specific analysis:
In the first ten days of the month, magnesium prices experienced a slight correction from their high levels. The positions of the 10 day, 20 day, and 30 day cycles were all at high levels. As the price fell, the 10 day moving average quickly fell back to a low level on March 9th, triggering a “10 day oversold” signal. During this period, a short-term bearish signal of “1/07 bottoming out” appeared simultaneously. However, the positions of the 10 day, 20 day, 30 day, and 60 day cycles remained at medium to high levels, corresponding to the upward trend of the medium to long term moving average without any signs of turning downwards, indicating that the logic of medium to long term rise has not been disrupted. At the end of the month, the price received effective support around 16650 yuan/ton and quickly rebounded above the central bond of the moving average, laying the foundation for stabilizing and accumulating momentum in the middle of the month.
The mid month trend shows a narrow horizontal trend, with prices consolidating in the range of 16700-16750 yuan/ton, and the moving average continuing to rise to form a bottom. On March 19th, the bullish golden cross signal of “1/07 breakout” was triggered, and on March 20th, a further “10 day super rise” signal appeared; At the same time, the positions of the 10 day, 20 day, 30 day, 60 day and other medium to long term moving averages remained high throughout the entire period, and the upward slope of the corresponding moving averages continued to rise. The prototype of the long position arrangement of the short, medium and long term moving averages has basically taken shape.
In the latter half of the month, it manifests as an accelerated upward trend, with prices breaking through the sideways platform and continuously rising, ultimately reaching a monthly high, and multiple cycles of super price signals appearing simultaneously.
Supply and demand side
On the supply side, the operating rate of magnesium smelting enterprises across the country is stable, but spot inventory continues to decrease. Mainstream factories will prioritize long order delivery from mid month onwards, and the expectation of maintenance will increase in the latter half of the year. The reluctance to sell at high prices is highlighted, and there is a scarcity of circulating goods in the market.
On the demand side, with the resumption of manufacturing work and production, traditional rigid demand is gradually being released. Coupled with the low magnesium aluminum ratio, the expansion of demand through the substitution of magnesium for aluminum has led to a structural improvement in the export market. In the latter half of the year, the concentrated release of replenishment demand has accelerated the rise of magnesium prices.
In terms of raw materials
The cost of raw materials forms a rigid support for magnesium prices, with core raw materials such as 75 # silicon iron and blue charcoal rising throughout the month. In March, the price of ferrosilicon increased from 5800-5900 yuan/ton to 6000-6100 yuan/ton, and the price of blue charcoal increased by more than 5%. The combined effect of the two factors increased the cost of magnesium by 700-850 yuan/ton, significantly reducing the industry’s profit margin and completely locking in the downward space of magnesium prices. The stable price of dolomite and the slight increase in industrial electricity prices further strengthen cost support.
Future forecast
The upward trend of magnesium prices in March is the result of multiple factors resonating: a bullish trend has been established in the technical aspect, raw material costs have solidified at the bottom, and the tight supply-demand balance pattern continues to strengthen. Based on the trend dimension, the medium and long-term moving averages continue to move upwards, with strong downward support, and the probability of a downward trend is extremely low. Overall, the bullish sentiment will still dominate the pattern. There is a rigid demand for overbought chips in the technical aspect, and the probability of a sustained and significant unilateral rise in early April is low. Simultaneously pay attention to the supply and demand fundamentals, upstream and downstream operating rates, raw material prices, and macro policy changes in the magnesium market. Fundamental changes will directly affect the continuity and upward space of this round of upward trend.
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