Executive Interviews

Asian Metal: Hello, Mr. Xu. Welcome to Asian Metal’s interview column. First, could you please introduce the basic structure of Hengfeng Magnesium and its main business operations?

Mr. Xu: Jiaxian Hengfeng Magnesium Co., Ltd. is located in the Yu-Jia Industrial Park in Wangjiabian Town, Jiaxian County. We are a private joint-stock industrial enterprise engaged in the production, sales and services of magnesium and magnesium alloys. The company focuses on lightweight magnesium and magnesium alloy materials and is committed to providing customers with high-quality magnesium and magnesium alloy products. Our main products are magnesium and magnesium alloys, and we currently have an annual production capacity of 20,000 tonnes of magnesium and magnesium alloys. In addition, we have a magnesium alloy granule production capacity of 200 tonnes per month.

Asian Metal: Since the beginning of the first quarter of 2026, Chinese magnesium ingot prices have shown a generally firming trend. What factors do you think have supported the rise in magnesium ingot prices? What caused prices to weaken in the second quarter?

Mr. Xu: In the first quarter of 2026, magnesium ingot prices generally fluctuated upward, rising from RMB 16,000/t ex-works cash at the beginning of January to RMB 17,500/t ex-works cash at the end of March.

There were two main reasons for this. First, market demand increased. Supported by the widening magnesium-aluminum price gap and the lightweighting advantages of magnesium products, the replacement of aluminum with magnesium has gradually advanced, while the replacement of plastics with magnesium has also accelerated. Downstream sectors, particularly two-wheelers and automotive die casting, are expected to undergo a profound transformation from “substitution applications” to “strategic applications.” Applications such as large integrated die-cast components for new energy vehicles, structural components for energy storage systems and high-end electronic housings are expected to accelerate their adoption due to the outstanding lightweighting and cost-effectiveness advantages of magnesium. This will drive the magnesium industry into a new stage, shifting from competition over upstream resources toward downstream technology integration and value-chain enhancement.

Second, following several years of industrial upgrading, technological transformation and the elimination of excess capacity, primary magnesium producers have generally become stronger and more capable of withstanding market risks. As magnesium producers became reluctant to sell at prices close to or below the loss-making level and sought to maintain prices while securing reasonable margins, primary magnesium producers were able to obtain a modest profit margin, creating a more positive cycle for the development of the industry.

Overall, magnesium ingot prices rose by RMB 1,500/t during the first quarter, which also helped boost market confidence to some extent.

Since entering the second quarter, however, supply in the magnesium market has remained very stable. Magnesium plants have maintained relatively high operating rates and steady production, while growth in downstream demand has fallen short of expectations. The expansion of China's downstream die-casting industry slowed, and some two-wheeler applications saw a return to plastics. Safety incidents at magnesium companies also prompted some die-casting manufacturers to slow the pace of equipment and production-line upgrades. In addition, weak demand in the automotive sector amid a sluggish economic environment weighed on magnesium consumption.

At the same time, the escalation of the conflict between the U.S. and Israel in early March disrupted production at several major aluminum plants in the Middle East, significantly reducing their magnesium consumption. Crude oil prices also rose, pushing ocean freight rates sharply higher and disrupting export logistics, which in turn hindered transactions. These factors caused the magnesium market to perform below expectations and prices to continue fluctuating downward.

Asian Metal: Hengfeng Magnesium began producing magnesium alloys in July 2025, and its alloy output has continued to increase since the beginning of 2026. What is the fundamental reason behind the company's decision to expand its alloy production? Which alloy grades are you currently focused on?

Mr. Xu: Since we began magnesium alloy production in July 2025, we have continuously increased alloy output based on several considerations.

From the downstream perspective, demand from the die-casting industry continues to improve, providing considerable market potential for magnesium alloys. From the perspective of our own operations, extending the industrial chain will help enhance our overall competitiveness. In addition to responding to government environmental protection policies and promoting downstream processing, this will enable us to provide die-casting customers with a more stable supply channel.

Furthermore, thanks to our integrated production chain from magnesium ingots to alloys, we have a relatively strong cost advantage, laying a solid foundation for further expanding our alloy production capacity.

Overall, extending from magnesium ingots into magnesium alloys is not only a response to market trends but also a strategic choice to enhance our competitiveness. At present, we mainly produce magnesium alloy grades in the AM and AZ series, among others. Meanwhile, we are also making every effort to develop flame-retardant magnesium alloys, with the new alloy already at the trial-production stage.

Asian Metal: As demand for semi-solid die-casting products increases, the application of magnesium alloy granules is also expanding. What are your plans for magnesium alloy granule production?

Mr. Xu: In response to rapidly growing demand for semi-solid die casting, we have already established a magnesium alloy granule production line, with current output at around 200 tonnes per month. Going forward, we will leverage our integrated industrial chain to continuously expand granule production, improve product stability and batch-to-batch consistency, and fully meet downstream demand for high-quality magnesium alloy granules.

Asian Metal: As the magnesium-aluminum price gap widens, magnesium products have performed relatively well in replacing plastics and aluminum. Does the company have any further plans to extend downstream production lines and expand applications?

Mr. Xu: As the magnesium-aluminum price gap continues to widen, the cost-performance advantages of magnesium products in replacing plastics and aluminum are becoming increasingly apparent, creating a favorable opportunity to accelerate the adoption of magnesium products.

At this stage, we will remain focused on our core businesses of magnesium ingots, magnesium alloys and magnesium alloy granules. We will continue to optimize and strengthen our existing product portfolio while consolidating the foundations of our supply chain.

Going forward, depending on market developments, the company will consider introducing die-casting manufacturers at an appropriate time. Through complementary strengths and strategic cooperation, we aim to further extend into downstream production, improve industrial-chain synergies, better capture market opportunities arising from the replacement of conventional materials with magnesium, and ultimately achieve mutually beneficial outcomes.

Asian Metal: Under your cooperation model with Jiarui Group, in addition to magnesium ingots, magnesium alloys and magnesium alloy granules, can Hengfeng Magnesium directly supply precision die-castings or semi-finished products to downstream customers? Does this integrated supply capability, covering “primary magnesium + alloys + downstream processing,” enable customers to simplify their supply chains and reduce overall costs?

Mr. Xu: At present, Jiaxian Hengfeng Magnesium and Jiarui International have combined their respective strengths across the upstream and downstream segments to jointly establish Jiamag New Material Technology (Yulin) Co., Ltd. Over the next five years, the company plans to invest in and construct, in two phases in Jiaxian Economic Development Zone, a project with an annual capacity of 50,000 tonnes of magnesium-based lightweight materials and 10 million new energy vehicle components for downstream processing. Once fully operational, the project is expected to generate annual sales of more than RMB 1 billion and create 300 jobs.

The first phase began preliminary work in January this year, with a planned total investment of RMB 110 million. It will include annual production capacity of 20,000 tonnes of magnesium-based lightweight materials and 2,000 tonnes of precision magnesium alloy die-castings. Products will include special-shaped magnesium ingots, new magnesium alloy materials, magnesium alloy granules, functional rare earth magnesium alloy materials and lightweight components for new energy vehicles, among others.

This means that we are not only capable of providing a stable supply of intermediate products such as magnesium ingots, magnesium alloys and magnesium alloy granules, but also have the supporting capacity to directly supply downstream customers with precision die-castings and new energy vehicle components.

This integrated supply model can help customers effectively streamline supply-chain links, reduce intermediate circulation costs, optimize overall costs and ensure greater supply stability.

Asian Metal: What is your outlook for magnesium product supply, demand and prices in the third quarter of 2026?

Mr. Xu: After entering the third quarter of 2026, the magnesium market is likely to enter a bottoming-out phase characterized by “limited downside, with upside potential yet to be unleashed.” In other words, production costs are providing a floor for prices, while new sources of demand are gradually emerging. The market is also regaining confidence after the pessimism seen in the second quarter.

First, production costs are providing a floor for magnesium prices. Current magnesium prices are already approaching or even falling below the smelting cost line in major producing regions, with most plants outside Xinjiang operating at a loss. Therefore, there is very limited room for further price declines. Meanwhile, high prices for raw materials such as coal are reinforcing magnesium producers’ determination to hold prices firm.

Second, the supply-demand balance is gradually shifting from a “buyer’s market” toward a “tight balance.” On the supply side, production will be affected by maintenance during the high-temperature season as well as cost pressures. Supply is therefore expected to decline overall after entering the third quarter, easing shipment pressure on magnesium plants.

On the demand side, although exports and traditional domestic markets are entering their seasonal off-peak period, the seeds of “new demand” have already been planted. As mass production of large integrated die-cast components for new energy vehicles advances, and as emerging sectors such as electric two-wheelers, robotics and the low-altitude economy develop, incremental demand for magnesium alloys is expected to build.

Although domestic demand remains weak in the short term and exports are being affected by elevated ocean freight rates, the long-term trend toward lightweighting remains irreversible.

Overall, primary magnesium prices are expected to fluctuate around RMB 16,200-16,800/t ex-works cash in the third quarter. However, market participants have generally recognized that current low prices are unsustainable and that a turning point in supply and demand is approaching.

Hengfeng Magnesium will continue to maintain stable production and supply, leverage the advantages of its integrated industrial chain and actively ensure downstream customers’ supply requirements.

Asian Metal: Thank you, Mr. Xu, for your valuable insights. We look forward to seeing Hengfeng Magnesium continue to achieve even greater success in the future.

Mr. Xu: Thank you to Asian Metal for providing this valuable opportunity for exchange. We look forward to taking this opportunity to strengthen cooperation with industry peers and work together to promote the high-quality development of the magnesium industry.