SMM analysis on China June manganese related output and July forecast

EMD

According to SMM, China's electrolytic manganese dioxide production in June was 14,700 mt (including 1,100 mt of LMO type, 8,900 mt of alkaline type, and 4,700 mt of carbon-zinc type), down 3.92% MoM and 16.84% YoY. The production of carbon-zinc and alkaline types showed no notable changes, while that of LMO type declined significantly. Entering the off-season, the LMO industry mainly consumed inventory of LMO-type EMD. The overall market adopted a wait-and-see stance, leading to a decline in scheduled production at producers. Additionally, as the demand from the primary battery market held stable, the EMD market held prices firm. Therefore, when downstream LMO producers used EMD for production, the profit was more limited, and new orders also decreased.

It is expected that the production of LMO-type EMD will barely increase in July amid the off-season for LMO industry, the substitutability of Mn3O4 and the loose supply. However, as primary batteries are consumer goods with relatively fixed procurement volumes, the production of carbon-zinc and alkaline type EMD may slightly increase. Therefore, the EMD production in July is estimated to be around 15,200 mt.

Mn3O4

According to SMM, China's Mn3O4 production in June was 9,400 mt (including 5,200 mt of electronic-grade Mn3O4 and 4,200 mt of battery-grade Mn3O4), down 3.09% MoM and 16.59% YoY. The production of battery-grade Mn3O4 significantly fell. Entering the off-season, LMO cathode producers showed no significant change in their procurement and restocking of Mn3O4. The downstream battery cell market was sluggish, and the growth rate of the digital market slowed down. Although the new energy and energy storage markets slightly rebounded, the demand remained weak. LMO procurement was maintained through long-term contracts from leading companies, with few spot transactions.

It is expected that the battery demand will remain in a low-growth state in July, with the persisting sluggish market, potentially further reducing the procurement volume of battery-grade Mn3O4. Therefore, the production of battery-grade Mn3O4 in July is expected to slightly decline. China's July Mn3O4 production is estimated to be to approximately 9,300 mt.

EMM

According to SMM, China's electrolytic manganese metal (EMM) output in June was 99,300 mt, down 1.54% MoM but up 66.58% YoY. The output in H1 was approximately 577,800 mt, up 4.31% YoY. The production costs for EMM climbed due to increased prices of manganese carbonate ore procurement and the rising prices of auxiliary materials like sulfuric acid. Additionally, the industry alliance meeting called for the EMM market to hold their offers firm. Therefore, the EMM producers showed a strong willingness to hold prices firm. However, the downstream steel mills' output decreased in June, leading to a lower acceptance of high-priced EMM. Some steel mills also held inventories, making them cautious in purchasing EMM. Due to losses and weak demand from downstream steel mills, some EMM plants slightly reduced production, causing a slight decrease in overall EMM output.

Entering July, the meeting decided that EMM plants would maintain 70% of their capacity, and some EMM plants in Yunnan that had previously halted production might resume operations in July. Therefore, the overall EMM supply will increase. Based on the survey of scheduled production, EMM output in July is expected to reach approximately 105,100 mt.