This week (5.18-5.22), the magnesium ingot market in Shaanxi region fell, with an average market price of 16550 yuan/ton at the beginning of the week and 16350 yuan/ton at the end of the week, a decrease of 1.21%.
The following analysis is based on fundamentals:
Supply and demand side
On the supply side, most magnesium smelting enterprises in the main production areas maintain a regular production pace, and the overall supply of raw magnesium is still relatively loose. At present, some enterprises have started to arrange summer maintenance and production reduction, and the supply side of magnesium is expected to gradually tighten in the future. This week, due to the slowdown in market transaction pace, some enterprises in the main production areas have seen a slight increase in inventory, but overall it is still in the middle range of the same period in history. The attitude of big factories to support prices remains firm, with a focus on controlling quantity and prioritizing meeting long order demands; A few small and medium-sized manufacturers under financial pressure have weakened their confidence in rising prices in the light market situation, and occasional low-priced selling situations have occurred.
On the demand side, the overall market operation is stable, and the demand in traditional metallurgy, desulfurization and other fields is basically flat, with no significant fluctuations observed; The demand for magnesium alloy processing is steadily released, and the performance of orders for lightweight new energy vehicles and structural components for electric two wheelers is particularly outstanding. However, due to the mentality of “buying up and not buying down”, downstream enterprises have low enthusiasm for replenishing inventory and generally adopt the operation mode of on-demand procurement and on-demand ordering. The export performance is also stable, with a year-on-year increase of 5.68% in China’s magnesium product exports in April, continuing the growth trend since the first quarter.
Raw material end
The prices of raw and auxiliary materials remain stable with a moderate to strong trend, and the production end of Lantan continues to be mired in losses. The current market price of magnesium has dropped to near the cost line of most enterprises, and the industry’s loss area continues to expand. The space for further price decline has been completely blocked.
comprehensive forecast
The short-term technical side sends a bottom signal of “oversold at a low level, brewing a rebound”, while the supply and demand fundamentals – high supply, weak demand, and inventory accumulation – do not support a significant rebound, forming a game pattern of resonance decline and divergence rise between the two. The simultaneous action of these two forces may lead to a complex rhythm of “slowing down the decline speed – sideways oscillation – testing the low again” in the price.
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