Dongxing: China's magnesium industry enters a new stage of supply structure upgrade. The development of new quality productivity boosts demand elasticity release.

Dongxing released a research report stating that by 2025, China's raw magnesium production capacity and output will account for 82% and 89% of the global total, respectively. The Chinese magnesium industry is entering a new phase of structural upgrading in the supply chain. The industry believes that industrial policies will guide the domestic magnesium industry to transition from a resource advantage to a high-end manufacturing advantage, which will help reshape the global supply chain of magnesium alloys and accelerate the process of domestic substitution of high-end magnesium alloys. Magnesium alloy is the largest consumer of magnesium, and demand for traditional magnesium consumption areas, such as steel desulfurization, aluminum alloy additives, and metal reduction, remains stable. In addition, the development of new quality productivity industries effectively boosts the release of magnesium alloy demand elasticity. Key points from Dongxing: By 2025, China's raw magnesium production capacity and output will account for 82% and 89% of the global total, respectively, and the Chinese magnesium industry is entering a new phase of structural upgrading in the supply chain. China has a complete magnesium industry supporting industry chain. According to statistics from the Development Research Center of the State Council, China has 90% of the global production capacity of metallic magnesium, 75% of magnesium oxide production capacity, and 65% of downstream refractory material production. From the perspective of raw magnesium production capacity, the Chinese raw magnesium industry is showing signs of capacity optimization. Tightening environmental policies (dual control of carbon emissions), increasing production costs (dual waste treatment), and eliminating backward production capacity (industry consolidation and electric furnace upgrades) have led to the removal of small-scale and environmentally substandard backward production capacity. By 2025, China's raw magnesium production capacity is expected to decrease by 1.3% to 1.4682 million tons, but the utilization rate of raw magnesium production capacity will increase by 5.5% to 74.5%. On the other hand, according to statistics from the China Nonferrous Metals Industry Association, China's raw magnesium production is expected to increase by 6.6% to 1.0935 million tons in 2025, and China's share of global raw magnesium production will increase from 88.7% in 2024 to 89.2% in 2025. Additionally, benefiting from downstream demand from new energy vehicles, lightweight materials, and other industries, the proportion of green high-end magnesium alloy production has increased while the proportion of traditional magnesium powder production has decreased (the proportion of magnesium alloy production has increased to 39.2%, while the proportion of magnesium powder production has decreased to 9.8%), effectively confirming the structural optimization of China's raw magnesium industry production capacity. China's dependence on the import of high-end magnesium alloy products is 60%, and the potential for domestic substitution of magnesium alloys is expected to accelerate. According to data from the China Nonferrous Metals Industry Association, although China's raw magnesium production accounts for nearly 90% of the global total, China's dependence on imported high-end magnesium alloys is 60%. Differences in magnesium product structure and demand structure have led to differentiated profits along the magnesium industry chain. From the perspective of gross profit margin, within the alloy industry chain, magnesium ingot production has a gross profit margin of only about 10% (based on a magnesium price of 18,000 yuan per ton), while the gross profit margin for magnesium alloys is over 30%. Considering the current magnesium price (average price from January 2026 to March 11, 2026 is 16,500 yuan), which has fallen to near the cost support level (the complete cost of magnesium smelting industry in China is 16,300 yuan per ton), the industry may expand from the single smelting of raw magnesium to high value-added magnesium alloy production. In addition, given the strategic value of magnesium alloys as a basic production element in strategic emerging industries such as automotive lightweighting, Siasun Robot&Automation, and urban air mobility, the industry believes that industrial policies will guide the domestic magnesium industry to transition from a resource advantage to a high-end manufacturing advantage, which will help reshape the global supply chain of magnesium alloys and accelerate the process of domestic substitution of high-end magnesium alloys. Observing from the policy perspective, the strategic value of magnesium alloys as a strategic metal is being re-evaluated. From a global perspective, influenced by the development demand of high-end manufacturing, new energy, and new materials industries, the strategic value of magnesium metal has significantly increased. At the national and industry association level in China, relevant policies continue to be introduced to guide the accelerated development of the high-end magnesium alloy manufacturing industry in China and promote the transformation of the Chinese magnesium industry from a resource advantage to a high-end manufacturing advantage, reshaping the global supply chain of magnesium alloys. The "Steady Growth Plan for the Nonferrous Metals Industry (2025-2026)" clearly states that magnesium alloy structural materials, hard alloys, and products' comprehensive performance should be improved; magnesium industry standard announcement management should be carried out, actively participating in the formulation of international standards for the magnesium industry; and continuous expansion of magnesium alloy applications in new energy vehicles, forged wheels, integrated large castings, motor housings, etc. At the 2025 National Magnesium Industry Conference, the China Nonferrous Metals Industry Association pointed out that during the "Thirteenth Five-Year Plan" period, the Chinese magnesium industry should transition from "lightweight auxiliary materials" to "strategic structural materials" and advance from being a "global supply center" to a "global innovation and value center." Observing from the perspective of industry supply and demand balance, the proportion or structural rise of global and Chinese magnesium alloy supply is expected to continue. Taking into account the current investment and production capacity utilization status of raw magnesium and magnesium alloy production capacity at the enterprise end, and combining data such as the proportion of magnesium alloy to magnesium supply and the proportion of China's raw magnesium and magnesium alloy supply to the global supply, the industry believes that from 2025 to 2028, global magnesium alloy production may increase from 650,000 tons to 1,305,000 tons (with a CAGR of 26% during the period), with China's magnesium alloy production increasing from 428,000 tons to 1.06 million tons (with a CAGR of 35% during the period). During the same period, the proportion of global magnesium alloys to magnesium supply may increase from 53% to 66%, with China's proportion increasing from 39.2% to 60%. The strategic value of high-end magnesium alloy products will continue to strengthen. Magnesium alloy has become the fastest-growing segment in magnesium consumption. According to statistics from the Fugu County Magnesium Industry Association, global magnesium consumption in 2025 was about 1.2 million tons, a year-on-year increase of 7%. Magnesium alloy is the largest segment of magnesium consumption, with global magnesium alloy consumption in 2025 at around 650,000 tons, an increase from 49% in 2024 to 54% in 2025. With a significant increase in the proportion of high-end magnesium alloy applications (such as new energy vehicles, electric bicycles, etc.), magnesium alloy has become the fastest-growing segment in magnesium consumption, with a year-on-year growth of 15% to 20%. In traditional magnesium consumption areas, demand for steel desulfurization (250,000 tons, accounting for 21%, unchanged year-on-year), aluminum alloy additives (180,000 tons, accounting for 15%, an increase of 3% year-on-year), and metal reduction (120,000 tons, accounting for 10%, an increase of 3% to 5% year-on-year) remains stable. The magnesium-to-aluminum price ratio has fallen to historically low levels, demonstrating the cost-effectiveness of magnesium metal applications. Since reaching a peak in 2021 (2.58), the magnesium-to-aluminum price ratio has continued to decline, reaching its lowest level in nearly five years on March 9, 2026 (0.66), a decrease of 74%. Given the advantages of magnesium alloy in applications such as green, intelligent, mobile, and lightweight, the continuous improvement of the cost-effectiveness of magnesium compared to aluminum may drive the continued expansion of magnesium alloy demand and push magnesium prices from the cyclical bottom towards the average price ratio return (average ratio over the past five years is 1.14, with approximately a 72.7% upside potential). Furthermore, considering the continued tight balance between supply and demand in the current primary aluminum market (China's primary aluminum production capacity is constrained by a ceiling, utilization rates are adequate, and overseas primary aluminum supply is uncertain), the continued upward trend in aluminum prices may strengthen the logic for the application of magnesium in the industrial chain and the logical progression of magnesium prices. The development of new quality productivity industries effectively boosts the release of magnesium alloy demand elasticity. Due to the characteristics of magnesium alloys, such as lightweight, high density, and high strength, they have become a core production factor in the development of new quality productivity industries. Given the performance factors of magnesium alloys (green, intelligent, mobile, and lightweight), price factors (magnesium-to-aluminum price ratio, high added value of magnesium alloys), policy support factors (national and industry policies), and technological development factors (semi-solid injection molding and other technological developments), through quantitative fitting of the growth changes in the five core consumption areas downstream of magnesium alloys, the industry believes that from 2025 to 2028, global demand for magnesium alloys may increase from 650,000 tons in 2025 to 1.39 million tons in 2028, with a CAGR of 29% during the period, and the proportion of magnesium demand may increase from 54% to 71%. Observing from the perspective of the five major downstream industries: Automotive lightweighting: With the increase in magnesium usage per vehicle (the current "Wenjie" vehicle uses over 20kg of magnesium per vehicle, according to the Ministry of Industry and Information Technology's "Energy-saving and New Energy Vehicle Technology Roadmap 2.0," by 2030, the use of magnesium alloys and the share of magnesium alloy vehicles will reach 35kg and 4% respectively), coupled with the expansion of the new energy vehicle industry, global demand for magnesium alloys in the automotive industry is expected to increase from 421,000 tons in 2025 to 1.061 million tons in 2028, with a CAGR of 36%; Siasun Robot&Automation: In the industrial Siasun Robot&Automation sector: Benefiting from the transformation and upgrading of the global manufacturing industry, the continuous advancement of automation technology, and the optimization of the global industrial chain, the industrial Siasun Robot&Automation industry is expected to grow steadily. Currently, the magnesium consumption for a single unit of magnesium alloy Siasun Robot&Automation produced by Baowu Magnesium Technology in collaboration with Estun Automation is approximately 5kg. Taking into account the iteration of large-scale industrial Siasun Robot&Automation magnesium alloy versions, the industry believes that global demand for industrial Siasun Robot&Automation magnesium alloys may grow at a CAGR of 53% from 2025 to 2028; for humanoid Siasun Robot&Automation, the magnesium consumption per unit is about 1.8 times that of industrial Siasun Robot&Automation (Tesla humanoid Siasun Robot&Automation consumes about 14kg of magnesium). With the start of mass production of humanoid Siasun Robot&Automation in 2026, the major manufacturers of humanoid Siasun Robot&Automation globally have set production targets of tens of thousands of units. Taking into account the rapid scale-up of humanoid Siasun Robot&Automation production and the increase in magnesium consumption per unit, the industry predicts that global demand for humanoid Siasun Robot&Automation magnesium alloys from 2025 to 2028 may grow at a CAGR of 88%. Combining market forecasts for industrial Siasun Robot&Automation and humanoid Siasun Robot&Automation, the industry believes that the Siasun Robot&Automation industry has become a new growth point for magnesium alloy demand, and global demand for Siasun Robot&Automation magnesium alloys from 2025 to 2028 may increase from 320 tons to 1,280 tons, with a CAGR of 58%; Building templates: Industry policies and industrial development are driving the accelerated adoption of magnesium-aluminum substitutes in the field of building templates. The industry believes that demand for magnesium alloys in the China State Construction Engineering Corporation template industry may increase from 82,000 tons to 150,000 tons from 2025 to 2028, with a CAGR of 37%; Magnesium-based hydrogen storage: Magnesium-based hydrogen storage has many advantages, such as high density (the energy density of magnesium-based hydrogen can reach 7.6%, while the standard hydrogen storage material is 5%), low operating costs (no need for low-temperature or high-pressure devices), high safety (can be transported over long distances at room temperature and pressure), simple chemical reactions, and no by-products. If magnesium-based hydrogen storage achieves mass production and development, the corresponding demand for magnesium alloys for global hydrogen energy production could reach 450,000 tons. As downstream applications drive the maturity of the hydrogen energy industry chain (production/storage/transportation/use), the volume of magnesium-based solid-state hydrogen storage materials could further boost demand for magnesium alloys in the long term. Urban air mobility: Magnesium alloy materials have characteristics such as lightweight, low cost, high storage capacity, and excellent electromagnetic shielding performance, effectively solving the problems of high material costs and low operational efficiency in unmanned aerial vehicles. The calculated magnesium consumption per unit for eVTOL is approximately 200kg per aircraft. Combined with the forecasted size of the eVTOL industry, global demand for magnesium alloys in the eVTOL industry from 2026 to 2028 may increase from 60 tons to 379 tons, with a CAGR of 151%; by 2035, the development of eVTOL may bring about 60,000 tons of demand for magnesium alloys in China and 200,000 tons globally. Global magnesium alloy industry supply-demand structure may continue to improve, and magnesium alloy company profitability and valuation levels are expected to increase. Combining the analysis and forecasts of the global magnesium alloy supply and demand sides, the industry believes that from 2026 to 2028, the global magnesium alloy supply-demand gap may be -10,000/-54,000/-85,000 tons, and the continued optimization of the global magnesium alloy industry supply-demand structure may push magnesium prices from cyclical lows. The rising prosperity of the magnesium industry, coupled with the increase in product value brought about by the transformation of the magnesium industry chain into high-end magnesium alloy manufacturing, will improve the profitability and valuation levels of related magnesium industry companies, enhancing their investment attributes. Related companies: Baowu Magnesium Technology, Ningbo Sinyuan Zm Technology, Dongguan Eontec, Zhejiang Wanfeng Auto Wheel. Risks: Unexpected growth in magnesium supply, slower-than-expected development of downstream demand industries, slower-than-expected growth in global new energy vehicle production, unexpected tightening of global liquidity, sharply rising interest rates, escalating and spreading regional conflicts.