With Supply Surplus, EMM Prices Ran Weak [SMM Analysis]

In July 2024, the domestic spot average price of EMM (main production areas) was 13,160.87 yuan/mt, down 2.59% MoM. The FOB monthly average price of EMM was $1,850.87/mt, down 1.93% MoM.

Supply side, the overall production of major EMM plants was largely stable. Additionally, EMM plants in Hunan and Yunnan, which had previously halted production, resumed operations, leading to a slight increase in overall EMM production in July. Demand side, the total production of stainless steel showed a decreasing trend in July, with cautious procurement of EMM and low acceptance of high-priced EMM. In summary, the EMM market experienced an intensified supply surplus in July, resulting in weak EMM prices.

Entering August 2024, EMM prices are expected to continue their weak trend. On one hand, although EMM plants slightly reduced production, the overall output remained high. In addition, with inventory accumulation, supply surplus persisted. On the other hand, due to the expected losses in stainless steel mills, it is difficult to increase production in the short term, resulting in continued weak demand for EMM. In summary, the price outlook for EMM is expected to remain weak.

In terms of exports, according to SMM, the price gap between domestic and overseas EMM gradually narrowed in July, reducing the enthusiasm of overseas steel mills for EMM procurement. Additionally, due to high temperatures and summer holidays in July, many overseas steel mills shut down for maintenance, leading to reduced demand for EMM from downstream steel mills. Considering the continuation of summer holidays overseas, the enthusiasm for EMM procurement from steel mills remains weak, and the export quotations for EMM are expected to decline slightly.