What Happened to the Magnesium Market in June 2025?
The magnesium market in June 2025 exhibited a clear downward trend followed by stabilization, characterized by increased supply and weakening demand pressures. According to Shanghai Metal Market (SMM) data, the average price of 99.90% magnesium ingot stood at 16,197.5 yuan/mt, representing a significant 5.40% decrease compared to May figures.
Early June witnessed a notable price decline as buyers retreated from previously heightened purchasing levels. This shift toward more rational buying behavior, combined with small magnesium plants offloading inventory at discounted rates, pushed prices down to approximately 15,950 yuan/mt by mid-month.
The mid-to-late June period saw temporary price stabilization as downstream traders entered the market with concentrated purchasing activity. However, this support proved insufficient to generate meaningful upward momentum, resulting in rangebound price fluctuations for the remainder of the month.
"The magnesium market's performance reflects a fundamental pattern of robust supply meeting tepid demand, creating persistent downward pressure on pricing throughout June," notes the SMM analysis report.
In terms of production volumes, primary magnesium output increased by 6.63% month-on-month, while magnesium powder production decreased by 1.65% compared to May figures. This divergence highlights the segment-specific dynamics affecting different areas of the magnesium industry.
Price Trends and Market Dynamics
The price trajectory through June can be divided into two distinct phases:
- Early June Decline: Characterized by buyer restraint and small producers selling at reduced prices
- Mid-to-Late June Stabilization: Marked by increased trader activity providing temporary price support
This two-phase pattern established a market floor around 15,950 yuan/mt, reflecting an equilibrium point between supply pressures and minimal demand support. The price movements demonstrate how quickly the market adjusted from the elevated levels seen in previous months to a more demand-constrained reality.
Why Did Primary Magnesium Production Increase in June?
The 6.63% month-on-month increase in primary magnesium production during June 2025 stemmed from several interconnected factors affecting producer economics and operational decisions. This production growth occurred despite challenging market conditions and declining prices.
Key Factors Driving Production Growth
The primary catalyst for increased production was the significant reduction in raw material costs throughout the supply chain. This decline in input expenses substantially improved profit margins for magnesium smelters, creating favorable conditions for production expansion even amid falling product prices.
SMM data indicates that previously idle facilities, which had halted operations due to unfavorable cost structures, found renewed economic viability in this improved margin environment. These smelters gradually restarted production during early June, contributing meaningfully to the overall volume increase.
Of particular significance was the resumption of operations at two major Xinjiang-based smelters following completion of scheduled maintenance. These facilities represent substantial production capacity within China's magnesium industry, and their return to active status provided a notable boost to nationwide output figures.
Counterbalancing Factors
While the overall trend showed production growth, certain regions experienced localized decreases:
- Two smelters in Shaanxi Province underwent maintenance or implemented production cuts
- These Shaanxi facility changes reduced output by approximately 1,500 metric tons
- The production losses in Shaanxi were significantly outweighed by gains elsewhere
This regional variation highlights the complex dynamics of China's magnesium production landscape, where individual facility decisions can have measurable impacts on provincial output while still being absorbed within the national trend.
The geological advantages of certain production regions, particularly relating to access to high-grade dolomite resources and energy supplies, continued to influence the economic calculus of which facilities resumed production first.
How Are Production Resumption Plans Progressing?
Industry monitoring reveals systematic advancement of production restart initiatives across China's magnesium sector, with varying degrees of progress among different facilities. SMM tracking identifies four primary magnesium smelters that have announced specific July resumption plans, representing potentially significant additions to market supply.
Current Status of Production Facilities
The resumption landscape shows a staggered implementation timeline:
- One major smelter has already initiated its production restart process
- Three facilities have confirmed July resumption intentions but have not yet begun operations
- Several additional smelters have indicated interest in restarting but have not committed to specific timeframes
"The progressive nature of these resumptions suggests a measured approach by producers, who are carefully evaluating market conditions before fully committing resources," according to industry analysts at SMM.
Technical aspects of production restarts involve considerable complexity, with facilities requiring thorough equipment checks, recalibration of temperature control systems, and verification of raw material quality parameters before achieving optimal operational status.
Production Outlook for July
Based on confirmed restart schedules and current operating facilities, industry projections indicate a slight month-on-month increase in primary magnesium production for July 2025. This forecast integrates both newly resuming capacity and existing operational facilities.
The incremental nature of this expected growth reflects producer caution amid market uncertainties. While improving profit margins have encouraged resumption plans, facilities are taking a conservative approach to production scaling, maintaining flexibility to respond to potential market volatility.
SMM analysts continue monitoring unconfirmed restart schedules, noting that additional facilities could potentially join the production roster if favorable margin conditions persist. Such developments would further influence the supply-demand balance in coming months.
What's Happening in the Magnesium Alloy Segment?
The magnesium alloy market is experiencing notable structural evolution despite challenging overall conditions. While production volume decreased month-on-month in June 2025, significant developments in material substitution patterns are creating longer-term industry implications.
Market Trends and Material Substitution
A pivotal development is the growing recognition of magnesium alloys' superior cost-performance characteristics compared to traditional aluminum alternatives. This recognition is driving a gradual but meaningful shift in material preferences among manufacturing enterprises.
SMM market analysis indicates that select die-casting enterprises have begun modifying production processes to accommodate magnesium alloy inputs in place of aluminum. These adaptations involve technical adjustments to casting parameters, temperature profiles, and finishing processes to optimize results with the alternative material.
"The material substitution trend represents a potentially significant long-term structural shift in demand patterns, though current implementation remains selective rather than industry-wide," notes the SMM report.
While this substitution dynamic has not yet generated large-scale procurement shifts, it represents an emerging trend worth monitoring as manufacturers complete validation processes and potentially expand implementation.
Seasonal Factors Affecting Demand
June traditionally functions as a peak production period for die-casting industries, creating seasonal demand support for magnesium alloys. However, 2025 has seen an earlier-than-typical transition toward off-season characteristics:
- Procurement volumes began retreating from seasonal highs during late June
- Order patterns showed increasing selectivity among buyers
- Price sensitivity intensified among downstream customers
This abbreviated seasonal peak has contributed to the moderating production volumes observed in June, with the industry consensus projecting a moderate decrease in magnesium alloy production for July as seasonal factors continue their downward trajectory.
The technical advantages of magnesium alloys—including superior strength-to-weight ratio and enhanced castability for complex components—continue driving interest despite challenging market conditions, suggesting potential demand resilience when seasonal factors improve.
How Is the Magnesium Powder Market Performing?
The magnesium powder segment faced particular challenges in June 2025, experiencing a 1.65% month-on-month production decline amid structural market adjustments. This specialized segment contends with unique demand dynamics and international trade considerations that distinguish it from broader magnesium markets.
Structural Market Adjustments
Magnesium powder producers faced dual pressure sources during June:
- Domestic consumption weakness: Internal market demand showed limited growth momentum
- Export order declines: International customers, particularly steel enterprises, reduced procurement volumes
These concurrent challenges have catalyzed a market differentiation process, with varying responses among different producer categories. The result is an increasingly segmented market structure where operational strategies diverge based on company positioning and order security.
SMM analysis reveals a particularly notable reduction in orders from European steel manufacturers, who traditionally represent significant consumers of Chinese magnesium powder for desulfurization applications. This reduction appears linked to production adjustments in European steel facilities responding to their own demand uncertainties.
Producer Response Strategies
The market has witnessed a bifurcated response pattern:
- Small and medium-sized producers: Voluntarily reduced capacity utilization to align with diminished order volumes
- Leading producers: Increased operating rates by leveraging concentrated order advantages and established customer relationships
This divergent approach has resulted in market share consolidation among larger producers, who have maintained operations by securing a higher percentage of available orders. Their scale advantages and often superior cost structures have enabled continued production despite challenging conditions.
Future Outlook
As the industry transitions beyond the traditional peak season, market projections indicate:
- Further demand weakening anticipated through July
- Intensifying production cut pressures, particularly for smaller producers
- Continued market share consolidation among leading manufacturers
This outlook suggests a challenging near-term environment for magnesium powder producers, with potential structural implications for industry composition if current trends persist through the remainder of 2025.
What Supply-Demand Factors Are Influencing the Market?
The magnesium market in June reflects complex interactions between supply expansion and demand moderation, creating persistent downward price pressure throughout the month. Understanding these dynamics provides essential context for evaluating market conditions and projecting future developments.
Supply-Side Developments
Multiple supply factors contributed to market pressure during June:
- Small producer pricing strategies: Smaller magnesium plants adopted aggressive selling approaches, offering discounted prices to maintain cash flow and market share
- Production resumption news: Market awareness of planned facility restarts created psychological pressure through anticipated supply increases
- Inventory accumulation concerns: Growing stockpiles at magnesium smelters raised concerns about potential future price impacts
The inventory situation deserves particular attention, as smelter stocks have shown consistent increases throughout June. This accumulation creates potential for additional market pressure if producers accelerate sales to reduce inventory carrying costs.
"The gradual but persistent inventory build observed at major smelters represents a significant market overhang that could influence pricing strategies in coming weeks," according to SMM analysis.
Demand-Side Factors
Demand patterns showed a mixed but generally subdued profile:
- Trader purchasing behavior: Mid-to-late June saw concentrated buying activity from downstream traders, providing temporary market support
- Order price constraints: Previously negotiated lower price agreements limited upside potential even during periods of increased buying
- Seasonal transition: The shift from peak to off-season dynamics progressively weakened demand support throughout the month
A particularly noteworthy demand factor involves international procurement patterns. Export markets, traditionally providing supplemental demand during domestic slowdowns, have shown limited growth momentum in 2025, reducing their compensatory effect on overall market balance.
The combined effect of these supply and demand factors created persistent downward price pressure, interrupted only by brief periods of stability when trader buying temporarily counterbalanced supply increases.
What's the Outlook for the Magnesium Market in July 2025?
The magnesium market enters July with mixed expectations across different product segments, influenced by ongoing mining industry evolution and seasonal demand patterns. This differentiated outlook highlights the increasingly segment-specific nature of market conditions.
Production Expectations
July production projections vary significantly by segment:
- Primary magnesium: Slight increase expected month-on-month, driven by continued facility resumptions
- Magnesium alloy: Moderate decrease anticipated as seasonal demand factors weaken
- Magnesium powder: Likely facing greater production cut pressures due to export challenges and domestic consumption patterns
These divergent trajectories reflect both the differing demand profiles for each product category and the varying supply adjustments occurring in response to market conditions.
The projected primary magnesium increase deserves particular attention, as it could exacerbate existing inventory concerns if not matched by corresponding demand growth. Industry analysts are closely monitoring the pace and scale of announced production resumptions to better calibrate supply expectations.
Market Indicators to Watch
Several key metrics warrant close observation through July:
1. Production Resumption Timeline
- Actual restart dates versus announced intentions
- Production ramp-up speeds at resumed facilities
- Any new announcements of additional capacity returns
2. Inventory Developments
- Stock levels at major smelters
- Rate of inventory accumulation or depletion
- Regional inventory distribution patterns
3. Demand Indicators
- Downstream purchasing behavior as seasonal factors shift
- Order patterns from die-casting enterprises
- International procurement volumes, particularly from steel producers
4. Cost Structure Dynamics
- Raw material price trends
- Energy cost developments
- Transportation expense fluctuations
These indicators will provide essential signals regarding market direction through July and into the third quarter of 2025.
Price Projection Factors
While specific forecast analysis insights remain challenging given market uncertainties, several factors will influence July price development:
- The continued expansion of supply could exert additional downward pressure
- Seasonal demand weakening may limit potential upside scenarios
- Production costs will establish practical floor levels as marginal producers adjust operations
The market's ability to absorb resumed production without significant price deterioration will be a critical determinant of July market conditions. Particular attention should focus on how quickly new supply enters the market and whether demand demonstrates any unexpected resilience.
FAQ: Understanding the Magnesium Market
What factors caused magnesium prices to fall in June 2025?
Magnesium prices declined by 5.40% in June primarily due to a combination of demand rationalization and supply expansion. Buyers retreated from previously elevated purchasing patterns, while small producers sold aggressively at discounted rates to maintain cash flow. Additionally, news of production resumptions created psychological pressure through anticipated supply increases.
The fundamental market pattern of robust supply meeting tepid demand created persistent downward pressure throughout the month, interrupted only by brief periods of stability when trader buying temporarily balanced supply increases.
How is material substitution affecting the magnesium alloy market?
Die-casting enterprises are increasingly recognizing magnesium alloys' superior cost-performance characteristics compared to aluminum alternatives. This recognition is driving a gradual but meaningful shift in material preferences, with select manufacturers modifying production processes to accommodate magnesium inputs.
While this substitution trend hasn't yet generated large-scale procurement shifts, it represents an emerging structural development that could significantly influence future demand patterns as manufacturers complete validation processes and potentially expand implementation.
What's causing the differentiation in the magnesium powder market?
The magnesium powder segment is experiencing market bifurcation in response to challenging conditions:
- Small and medium-sized producers have voluntarily reduced capacity utilization to align with diminished order volumes
- Leading producers have increased operating rates by leveraging concentrated order advantages and established customer relationships
This divergent response has resulted in market share consolidation among larger producers, who maintain operations by securing a higher percentage of available orders. Their scale advantages and often superior cost structures enable continued production despite challenging market conditions.
How might seasonal factors impact the magnesium market in July?
July traditionally represents a transitional period toward off-season dynamics for magnesium demand, particularly in die-casting applications. This seasonal shift typically weakens procurement volumes, creating challenges for producers attempting to maintain price levels or operating rates.
The 2025 market appears to be following this seasonal pattern, with June already showing signs of earlier-than-typical transition toward off-season characteristics. This suggests July could see further demand moderation, potentially increasing pressure for production adjustments across various magnesium product categories.
Disclaimer: The market analysis and projections contained in this report represent current industry understanding based on available data. Actual market developments may vary based on unforeseen factors. Readers should conduct their own due diligence before making business or investment decisions based on this information.
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