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Magnesium Ingot Market Review in 2022 and Trend Outlook in 2023

China’s magnesium metal market will face multiple challenges in 2022. The overall keywords are price fluctuations and downward trends, manufacturers’ profits first high and then low costs, the twists and turns of Lan Tan’s elimination of backward production capacity, and the three consecutive months (from November 2022 to January 2023). month) spontaneous production reduction.

1. The structure of China’s magnesium ingot industry has not changed, and Fugu still dominates

Distribution of manufacturers: As of 2021, my country’s raw magnesium production capacity is 1.3761 million tons, and the raw magnesium output is 948,800 tons. The number of companies is 49, including 34 in Shaanxi with an annual output of about 600,000 tons, and 8 in Shanxi with an annual output of about 200,000 tons. There are three companies in Xinjiang with an annual output of about 50,000 tons, three companies in Inner Mongolia with an annual output of about 30,000 tons, and one company in Ningxia with an annual output of about 30,000 tons. Judging from the regional distribution of manufacturers, Shaanxi’s output accounts for more than 60% of the country’s total output, making it the main magnesium ingot production area with an absolute advantage.

2. Domestic magnesium ingot prices fluctuated downwards and stabilized in the second half of the year compared with the first half.

In 2022, the domestic magnesium ingot market showed a downward trend in the early stage and tended to be weakly stable in the later period. The main reason is that domestic and foreign demand has not recovered, and the market has weakly adjusted when supply exceeds demand.

The average price of magnesium ingots in 2022 is 30,685.94 yuan/ton, a year-on-year increase of 19.88%. The highest price in the year is 51,500 yuan/ton in January, and the lowest price in the year is 21,500 yuan/ton in December. Price differences among various production areas are small. Xinjiang, Inner Mongolia, and Ningxia follow the market changes in Shaanxi. Although they lack the advantages of Shaanxi Lantan’s circular economy, they also have certain competitiveness in terms of electricity charges, dolomite mines, etc. Shanxi’s prices are higher due to high costs.

Looking back on 2021, with the domestic dual control policy on energy consumption and the intensification of environmental protection inspections, the Shaanxi market has been the main target for rectification and a large number of backward production capacities have been eliminated. Most small factories have been required to suspend production for rectification. Under the industry upgrading and transformation, the scale of enterprises and The degree of concentration has increased significantly. The overall domestic magnesium ingot market will show a rapid upward trend in 2021, with slight adjustments in the later period. The average annual price of domestic magnesium ingots is 25,598.20 yuan/ton, a year-on-year increase of 88.83%. The highest price in the year was 64,500 yuan/ton in September, and the lowest price in the year was 13,950 yuan/ton in January.

3. Magnesium ingot production decreased, but performance was good in the first and second quarters

The national production of magnesium ingots in 2022 is expected to be 899,100 tons, a year-on-year decrease of 5.24%. From the perspective of production change periods, the national magnesium ingot production in the first quarter was 237,000 tons, the national magnesium ingot production in the second quarter was 237,100 tons, and the national magnesium ingot production in the third quarter was 237,100 tons. Ingot production is at 207,000 tons. In the fourth quarter, the national magnesium ingot production is expected to be 218,000 tons. The overall output remains stable. Due to weakening market demand in the third and fourth quarters, magnesium ingot manufacturers first experienced a market off-season, and then prices fell to the coastline. Some magnesium plants have chosen to reduce production.

Compared with 2021, most companies will complete industrial upgrading in 2022, and the monthly output of magnesium ingots will be as high as 70,000-80,000 tons. Although Shaanxi’s policy on eliminating backward small furnace types of blue carbon has not yet been completed, its impact on magnesium ingot output will be small. At the same time, considering that the magnesium ingot market will reach a new height in 2021, magnesium ingot production in 2022 will choose to produce at full capacity when profits are good. Starting in July, the magnesium ingot market has entered the off-season. The main reason is that foreign countries have started summer vacation mode. The weakening of export demand has caused domestic magnesium plants to enter the normal maintenance stage. With the end of the summer break in October, magnesium ingot production gradually rebounded. However, due to international energy shortages and reduced domestic market demand, magnesium ingot manufacturers have not reached full production, and as prices have fallen, some manufacturers have entered production reduction mode again.

4. The downstream demand pattern for magnesium ingots remains unchanged

The downstream market of magnesium ingots in China is mainly used in magnesium alloy processing, aluminum alloy additives, titanium sponge reducing agents, and steel desulfurization. In China’s raw magnesium consumption structure, magnesium alloys account for the largest proportion of 36%, followed by aluminum alloy additives, accounting for 29%. In addition, sponge titanium and steel desulfurization account for 18% and 10% respectively. Magnesium alloy has lightweight, corrosion resistance, shock absorption, impact resistance, good mechanical properties, and regeneration, and is currently widely used in the automotive field. In 2021, my country’s raw magnesium consumption will be 486,500 tons, a year-on-year decrease of 10.12%, of which 140,100 tons will be used in the material field. my country’s magnesium alloy production will reach 360,500 tons, a year-on-year increase of 5.35%. In addition, since 2015, my country’s raw magnesium consumption has ranked first in the world for many consecutive years.

5. Magnesium ingot exports are better than expected, but mismatching still exists

According to customs data, my country exported 477,200 tons of various magnesium products in 2021, a year-on-year increase of 21.2%. From January to November 2022, the export of various magnesium products was 463,721.88 tons, a year-on-year increase of 37.29%. Among them, magnesium ingots, magnesium alloys, and magnesium powder occupied the top three positions. From the perspective of export provinces, Shanxi, Zhejiang, and Jiangsu became the top three export performers this year. The total annual export volume of provinces in China is more than 50,000 tons. From the perspective of export structure, my country’s export structure is still dominated by primary products and limited deep-processed products. The proportion of magnesium products and magnesium processed materials is only 1.63 %, more than 98% of magnesium metal export products are primary raw materials. Among them, the main exporting provinces and the main producing areas of magnesium ingots are still misaligned, and there is still a lot of room for the development of magnesium ingots in my country. In the context of weak domestic demand this year, magnesium ingot exports are better than expected, which has also brought positive changes to the domestic market. It is expected that the export level will reach more than 500,000 tons in 2022, setting a new high.

6. Domestic magnesium ingot market outlook in 2023, recovering slowly

Compared with 2022, the magnesium ingot market demand will recover to a certain extent in 2023. On the one hand, new production capacity will be added in the domestic market, and on the other hand, foreign markets will gradually improve. Driven by demand, the price of magnesium ingots may rebound, especially at the end of 2022. The profits of various magnesium factories continue to be compressed, and some manufacturers have experienced cost inversion. In 2023, with the addition of policies such as Lantan’s environmental protection rectification, the magnesium ingot market may get new opportunities.

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