Since the beginning of 2024, due to the temporary overcapacity, magnesium prices have been continuously declining, with a cumulative drop of over 5000 yuan/ton, setting a new record low in 44 months and damaging industry confidence. Due to long-term price inversion, domestic magnesium factories continue to bear cost pressure. Several magnesium smelting enterprises have carried out early maintenance and reduced production to cope with losses after entering spring. According to the latest statistics, it is expected that the month on month decline in raw magnesium production in the first quarter of 2025 in China will reach 20% -25%, with a decrease of over 30% in the Shenfu region. The market supply has significantly decreased, and magnesium factory inventories are mostly at a low level. Against the backdrop of a large deficit in magnesium aluminum prices, the trend of "replacing aluminum with magnesium" is inevitable, and the demand for magnesium in fields such as new energy vehicles is bound to increase. After this round of adjustment, the mismatch between supply and demand has been corrected, and the situation of oversupply has been completely reversed.

Since last weekend, magnesium prices have rebounded after hitting the bottom of 15000 yuan/ton, and have continued to rise for the first two days of this week, with a cumulative increase of 400 yuan/ton, but still below the cost line of magnesium factories. Many magnesium factories are unwilling to ship at the current price, and have a strong willingness to raise prices. Magnesium prices still maintain an upward trend. As magnesium prices gradually recover and remain within a reasonable range, a balance between supply and demand is gradually established, forming stable supply, prices, and expectations, which will effectively rebuild industry confidence and enter a recovery channel where both upstream and downstream of the industry chain are profitable and the scale of the industry expands in an orderly manner.
The specific situation of production reduction and shutdown is as follows:

1. The enterprises that have been shut down in Fugu area include Tianyu, Huashun, Tongyuan, Wanyuan, Jujinbang, and Shengxin; Enterprises that have reduced production include Xintian (40% reduction), Jinwantong (40% reduction), Fangzheng Magnesium Industry (50% reduction), Jinchuan Magnesium Industry (50% reduction), Weitian Tengda (50% reduction), and Yabo (20% reduction); Enterprises planning to shut down by the end of the month include Moyuan, Yihe, Xiyuan, and Wanxin; Enterprises that do not have production conditions due to incomplete rectification include Dongxinyuan, Fuxing Industry and Trade, Xinheyuan, Tianyuan, Huiye Magnesium Industry, Huiye Lixing, Xingmao Magnesium Industry, and Yufeng Magnesium Industry.

2、 The discontinued enterprises in Shenmu area include Hengrun, Jingyuan, Sihai, and Moyuan Dingtai; Enterprises that have reduced production include Dongfeng (50% reduction), Xinqing (20% reduction), Jiangtai (10% reduction), and Xingyiyuan (60% reduction).

3、 The discontinued enterprises in Shanxi region include Ruige, Zhenxin, etc; Currently, the capacity utilization rate of Yinguang and Wulong is only 1/3.