This week (7.19-7.24), the magnesium ingot market in Shaanxi region rose, with an average market price of 15725 yuan/ton at the beginning of the week and 15900 yuan/ton at the end of the week, an increase of 1.11%.
The following analysis is based on fundamentals:
| Gamma-PGA (gamma polyglutamic acid) |
Supply and demand side
Supply side maintenance and production reduction continue, but the incremental contraction is limited. Recently, some magnesium factories in the main production areas have arranged maintenance and production reduction during the high-temperature season, resulting in a contraction of short-term supply increment. The industry’s operating rate has significantly fallen from its high level, and many original magnesium smelting enterprises have entered a period of shutdown and maintenance. However, some manufacturers’ maintenance plans are concentrated in mid to late July, and as some companies resume production, production is expected to bottom out and stabilize. At the same time, there is a slight accumulation of inventory in the factory, and the pressure of magnesium factory shipments still exists.
The off-season effect on the demand side is significant, with both internal and external demand weakening synchronously. Currently, it is the off-season for traditional consumption in the magnesium industry, and downstream procurement demand continues to weaken. In terms of the domestic market, downstream only maintains essential procurement, overall transaction volume is light, and there is no centralized replenishment of inventory or new orders at the terminal. Traders tend to be cautious and focus on buying and selling at will, without actively hoarding goods. In terms of overseas markets, customers in Europe, America and other regions have entered the summer vacation period, and foreign trade orders have significantly declined. The magnesium alloy market also presents the characteristics of “weak follow-up of terminal demand and light trading volume”.
raw material end
Rigid cost construction for bottom support. The current magnesium price has fallen to a nearly 7-month low, and magnesium factories in the main production areas have long-term production and sales inversion, resulting in losses of hundreds of yuan per ton. The comprehensive cost rigidity of dolomite, blue charcoal, ferrosilicon, electricity, labor, and environmental maintenance is highlighted. Continued low-priced shipments will further expand operating losses, resulting in a significant decrease in the willingness of magnesium factories to lower prices and offer discounts for shipments. The cost side support has become the core factor that makes it difficult for the current price to continue to fall deeply.
integrated forecasting
Taking into account both fundamental and technical factors, the short-term magnesium price is expected to continue its pattern of low, weak stability, and narrow fluctuations. Before there is a substantial improvement signal on the demand side, it is difficult for magnesium prices to break out of the trend rebound market, and it is likely to continue to fluctuate and bottom out in the low range.
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