Analysis on Rising Room of Manganese Prices

SHANGHAI, Jan. 7 (SMM) -- Today, mainstream prices of EMM were in the RMB 14,700-14,800/mt range. Prices are expected to advance slightly due to higher costs, tight electricity supply and expectation of purchases from downstream steel mills.

Current costs at manganese producers are in the RMB 14,000-14,500/mt range in Hunan province, around RMB 14,000/mt in Xiushan, Chongqing, in the RMB 14,500-15,000/mt range in Guizhou province and in the RMB 14,500-15,000/mt range in Guangxi province.

Cost trend:

1. Ore powder

Supply of ore powder is tight with the approaching of Chinese New Year holiday, while purchasing volumes from manganese producers are increasing. In this context, prices of ore power may hover at high levels before the Chinese New Year holiday due to reduced supply and increased demand.

2. Electric power

Supply of electric power is tight in Guizhou province. Electric power supply is reduced by 1/3 at manganese producers in Songtao and Tongren under electric power restriction policy and this trend will not change before the Chinese New Year holiday. Supply of electric power is also tight in Hunan province, although electric power restrict policy hasn't implemented in Hunan yet. Electric power cost is relatively higher in Guangxi province, with highest electric power cost at RMB 0.68/kWh, and the lowest electric power cost at RMB 0.57/kWh. Supply of electric power is relatively ample in Xiushan, Chongqing, with electric power cost at RMB 0.486/kWh, and there is no news that electric power costs will be raised at present. Overall speaking, electric power costs are at high levels for 3/4 manganese producers, and this trend will not change before the Chinese New Year holiday.
 
3. Sulphuric acid

Prices of sulphuric acid, raw material for production of manganese, remain stable after a relatively rapid increase, and will not rise significantly in the near future.

In summary, although costs at manganese producers remain at high levels and will not decline in the short term, the situation is not as same as some market insiders' statement that prices of manganese still have spacious rising room and rising pace of manganese prices can not catch up growing pace of raw material costs. SMM believes manganese prices will experience corrections at high levels when advancing above RMB 15,000/mt based on analysis of costs.

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