According to the monitoring of the commodity market analysis system of Shengyi Society, the magnesium ingot market in Shaanxi Province fell this week (8.9-8.16), with an average market price of 18033 yuan/ton at the beginning of the week and 17933 yuan/ton at the end of the week, a weekly decline of 0.55%.

This week’s market analysis

This week, the price of magnesium ingots reached a near May low, stabilizing and slightly weakening. The price has fallen to near the cost line, and manufacturers have a pro price mentality. Some magnesium factories have slightly reduced prices to promote transactions.

Supply and demand side

Insufficient driving force on the demand side, coupled with weak raw material prices, does not provide favorable support for magnesium prices. Confidence in the future market is clearly lacking, and magnesium prices continue to be under pressure.

In terms of raw materials

The price of Fugu 75 silicon iron has fallen compared to the middle of last week. Recently, the futures of ferrosilicon have fluctuated downwards, and the spot market has followed suit with a weak decline. Market transactions are light, and there is a downward pressure on downstream purchases. The actual transaction price of ferrosilicon has slightly loosened, and it is expected that the short-term ferrosilicon market may remain stagnant, with little possibility of a significant price adjustment.

The price of orchid charcoal in Fugu area remains stable, and mainstream manufacturers’ quotations have remained basically unchanged. It is expected that orchid charcoal will not rise in the short term and will continue to maintain a weak and stable trend.

Future forecast

At present, the downstream demand for magnesium ingots is poor, and only essential procurement is maintained downstream, resulting in a continued stalemate in market supply and demand. The short-term supply and demand pattern of the magnesium market is unlikely to change, and it is expected that the magnesium market will continue to maintain a weak and stable trend, with prices fluctuating narrowly in the low range.

1、 Price trend

According to the Commodity Market Analysis System of Shengyi Society, the average market price of baking soda on August 12th was 2060 yuan/ton. On August 11th, the baking soda commodity index was 139.91, unchanged from yesterday, a decrease of 40.68% from the highest point of 235.84 points during the cycle (2021-11-10), and an increase of 58.50% from the lowest point of 88.27 points on December 22, 2020. (Note: Cycle refers to September 1, 2020 to present)

2、 Market analysis

According to the commodity analysis system of Shengyi Society, the price of baking soda is running weakly, and the company’s shipments are still acceptable. The price of baking soda in Henan region is declining, with a factory price of around 1500-1600 yuan/ton. Due to poor downstream demand, it is expected to operate weakly in the later stage. Upstream: According to the commodity analysis system of Shengyi Society, the price of soda ash has been running weakly this week. The current average market price is 1874 yuan/ton.

Business analysts believe that the price of baking soda has been weak recently, and the upstream raw material soda ash has been weak recently. Downstream industries such as pharmaceuticals, textiles, and food have been purchasing on demand recently, with average demand enthusiasm and a supply-demand game. It is expected that the price of baking soda will be weak in the later stage, depending on downstream market demand.

1、 Trend analysis

According to the monitoring of nickel prices by Shengyi Society, the upward trend of nickel prices this week (8.1-8.9) was not maintained and fluctuated downward again. As of the weekend, the spot nickel price was 131666 yuan/ton, a decrease of 1.14% from the first day and a year-on-year decrease of 24.54%.

According to the weekly rise and fall chart of Shengyi Society, in the past 12 weeks, nickel prices have fallen 9 times and risen 3 times, with overall nickel prices weakening and showing signs of rebound.

Nickel industry chain

Macroscopically, the US manufacturing PMI value for July was 46.4, lower than market expectations and has been shrinking for 9 consecutive months. China’s manufacturing PMI value for July was 49.4%, slightly down 0.1 percentage points from the previous month. The US non farm payroll report for July was weak, coupled with a series of weak financial reports released by US technology giants. Concerns about global economic growth anxiety and weak demand affected the market trend. However, the number of initial jobless claims in the US only decreased narrowly than expected, and various institutions predicted that the Federal Reserve would cut interest rates in September, stabilizing market sentiment. The US stock market also rose sharply on Thursday, causing a wide range of fluctuations in the impact on nickel.

On the supply side, Indonesia’s nickel exports significantly increased in the first half of the year, with a total volume of 805000 tons and an annual growth rate of 20.7%. Under long-term supply pressure, several nickel mining projects in Australia have gradually reduced or stopped production. LME nickel inventory continues to rise. As of August 9th, LME nickel inventory reached 112404 tons, the highest level since December 2021. Shanghai nickel inventory is 16499 tons, showing a continuous downward trend. In July 2024, the national refined nickel production reached 28900 tons, a month on month increase of 8.2% and a year-on-year increase of 33.87%. In July, the national production of nickel sulfate was 27800 metal tons, and the national physical ton production was 126200 physical tons, a decrease of 9% month on month and 29.7% year-on-year. In July, the national production of nickel pig iron was 29900 tons of nickel, with 737000 physical tons. The physical tons increased by 10.69% month on month, and the metal tons increased by 6.43% month on month.

In terms of demand:

Stainless steel needs to be neither too hot nor too hot. It is reported that the national stainless steel crude steel production in July 2024 was about 3.1838 million tons, a decrease of 1.44% month on month and 2.13% year-on-year. Affected by high temperatures, overall demand is weak, and stainless steel plants are beginning to reduce their load. With the expected peak season of “Golden September and Silver October” approaching, stainless steel production will improve in August.

The demand for ternary batteries has slowed down. The installation of lithium batteries in June 2024 reached 43GWh, a year-on-year increase of 30%. 11 GWh of ternary batteries were loaded onto the vehicle, accounting for 26%; The installed capacity of lithium iron phosphate batteries is 32GWh, accounting for 74%, while the growth of ternary batteries has slowed down compared to the previous period. From January to June, 203G of lithium batteries were installed, a year-on-year increase of 34%.

Market forecast: Business analysts believe that the trend of the metal market is easily affected by macro factors, and the negative sentiment on the macro level may gradually weaken. There is an oversupply of international nickel, but domestic nickel inventory in Shanghai has weakened, and domestic demand expectations are slowly improving. It is expected that nickel prices will fluctuate and rebound.

According to the Commodity Market Analysis System of Shengyi Society, from July 29th to August 2nd, the average price of BDO in China fell from 8942 yuan/ton to 8842 yuan/ton, with a price drop of 1.12% during the period and a year-on-year decline of 20.13%. Recently, some devices have been shut down for maintenance and replacement, resulting in a decline in the overall operating rate of the industry. But the downstream industry load has also decreased, resulting in a reduction in the digestion of raw materials. Manufacturers holding goods are under pressure to ship, and negotiations for discounts on actual orders are underway to promote sales. The market center of gravity is fluctuating downward.

On the supply side and in terms of equipment, the industry’s capacity utilization rate has decreased, and suppliers are mainly inclined to maintain prices. The supply of BDO is affected by favorable factors.

In terms of cost, raw material calcium carbide: there has been a significant increase in the supply of calcium carbide, and there has been a noticeable recovery and improvement in the operation of supporting calcium carbide equipment. At the same time, the early maintenance of the calcium carbide furnace has been completed, resulting in an overall increase in supply. The calcium carbide market is running abnormally low. Raw material methanol: The methanol market is experiencing a narrow consolidation. As of 10:00 am on August 2nd, the domestic methanol Taicang price is 2510 yuan/ton. The cost impact of BDO is mixed.

On the demand side, although the downstream PTMEG industry has slightly increased with the increase of maintenance equipment load, and the TPU and PU slurry load in the polyurethane field has also increased, the second largest downstream PBT industry has experienced a significant decline in load due to the impact of some equipment load reduction production. The demand side has reduced the amount of raw material digestion, and the supply-demand contradiction still exists. At the same time, downstream industries such as THF, PBT, GBL, PBAT are experiencing a decline in market conditions, leading to poor transmission of industrial chain costs and severe pressure on raw material prices. The demand side of BDO is affected by bearish factors.

Market forecast shows that some maintenance equipment will operate at a reduced load after restarting, leading to an increase in market supply. Downstream industries are experiencing both negative and negative impacts, and overall demand has also increased. However, the supply-demand imbalance continues, putting pressure on manufacturers’ shipments. Business analyst BDO predicts that the domestic BDO market will mainly operate weakly.

Aluminum prices fell by 5.68% in July

Aluminum prices continued to decline in July. According to the Commodity Market Analysis System of Shengyi Society, the average price of domestic aluminum ingots in the East China market on July 31, 2024 was 18986.67 yuan/ton, a decrease of 5.68% from the market average price of 20130 yuan/ton at the beginning of the month (July 1).

Reasons for the decline in July

1. Overseas economic data has hit hard on expectations of interest rate cuts, and the market no longer fully expects the Federal Reserve to cut interest rates in November. At the macro level, international commodity prices have been suppressed, and non-ferrous metal prices have retreated.

2. Weakening overseas data triggers recession expectations, while CPI data gradually raises market expectations of a weakening US economy. The Federal Reserve’s Beige Book shows that businesses expect future growth to slow down and the labor market to remain weak. The production of primary processed aluminum products in the United States has decreased, and the demand for aluminum ingots has maintained a low season performance.

On the domestic front, the economic data for the second quarter was released, with a GDP of 4.7%, which was lower than expected. Domestic downstream inventory replenishment and falsification, and inventory removal is not smooth. As of July 29th, the inventory of electrolytic aluminum in major domestic markets was 795000 tons, unchanged from the inventory of 795000 tons on June 3rd; Compared to July 1st, the inventory was 762000 tons, with a cumulative inventory of 33000 tons.

Summary of favorable factors in August

1. Domestic macro factors: Recently, the central bank has taken frequent easing measures, such as lowering the quoted interest rates for one-year and five-year loan markets. Subsequently, several banks announced the reduction of deposit interest rates, and some banks in Shanghai and Beijing began to lower mortgage interest rates. The National Development and Reform Commission and the Ministry of Finance issued the “Several Measures on Strengthening Support for Large scale Equipment Renewal and Consumer Goods Trade in”, and arranged about 300 billion yuan of ultra long-term special treasury bond funds for support.

Currently, the price of aluminum ingots has fallen to near the marginal cost, and the upstream raw material market is tight, which provides some support for the price.

Supply and demand dynamics in August

The Yunnan and Inner Mongolia projects have completed their resumption of production, and a factory in Sichuan plans to resume production of 12.5W by the end of July, with a planned duration of two months. The import window is currently closed.

Aluminum prices may stabilize and stop falling in August

At present, aluminum prices have fallen below the level of 19000 yuan, and downstream acceptance has increased. It is expected that aluminum prices may stabilize and stop falling in August.