Off-Season Demand Drags, EMM Remains Weak and Moves Sideways [SMM EMM Weekly Review]

This week, China’s domestic EMM market generally consolidated on a subdued note. Spot prices pulled back slightly, while a fierce tug-of-war between longs and shorts unfolded on the futures market, creating a consolidation pattern marked by subdued weakness.

The cost side continued to provide rigid support, with prices of core raw materials such as sulphuric acid and manganese ore remaining persistently firm. This, combined with the ongoing implementation of phased production cuts at small and medium-sized smelters and the strong willingness of major leading enterprises to hold prices firm, effectively locked in the room for a deep market price decline. However, the features of the traditional industry off-season became pronounced. Downstream demand across the stainless steel and lithium battery industry chains was lackluster overall. End-users maintained a hand-to-mouth procurement model with no concentrated restocking operations, and a pronounced wait-and-see sentiment pervaded the market. Meanwhile, the industry’s overall operating rate and social inventory were at high levels, and the loose supply-demand fundamentals continued to suppress the room for a price rebound. This week’s price weakness stemmed from dual bearish pressures on the procurement and logistics ends. Downstream tenders from steel mills generally pushed for lower prices, and scattered retail quotations in the market eased downward, causing the center of spot transaction prices to shift slightly lower. Furthermore, due to the impact of typhoon weather along the coast, major domestic ports saw periodic navigation bans and traffic restrictions, disrupting seaborne logistics. Export orders were shipped out sluggishly and transactions lacked follow-through, further dragging on market trading sentiment and widening the divergence between longs and shorts. In summary, while the current bottom of EMM costs is well-supported, multiple bearish factors—sluggish demand during the off-season, downstream pressure for lower prices, and logistics disruptions—are stacking up. In the short term, the market is most likely to continue its pattern of consolidating on a subdued note within a range.