SHANGHAI, Mar. 18 (SMM) --Today, mainstream offers of EMM were in the RMB 14,800-15,000/mt range. Trading sentiment was moderate and domestic EMM prices continued to fluctuate at low levels as downstream demand hasn't improved yet.
It was reported that high cost at EMM producers is the major factor preventing EMM prices from slipping, and demand didn't show any sign to improve yet. Will the strong momentum from cost gradually weaken? Market players began to focus on support from costs. After a comprehensive analysis, SMM believes that costs at EMM producers will remain stable in the near term, and will not have much downward room temporarily. The following is the general analysis on price trend of major raw materials like ore powder, sulfate acid and selenium dioxide:
With the approach of normal and high water period, market insiders began to show concern that electricity price cut will weigh on EMM prices again. However, EMM producers in major producing origins haven’t received any notice yet, and the specific adjustment of electricity prices may be released in late March, according EMM producers currently. In addition, drought in Yunnan, Guizhou and Sichuan provinces will also affect adjustment of electricity prices, and it is expected that electricity prices will continue to stay stable next week.
In general, production capacity at China’s EMM industry expanded too rapidly and supply of raw material can hardly meet demand from EMM processing development. In this context, prices of manganese carbonate ore were basically on upward track while decline trend of EMM was stabilized, limiting any room for manganese carbonate ore prices to fall. From the short term, most producers told that miners were busy exploring ores and supply of ore powder was tight, so manganese ore powder pries may not slip temporarily. As a kind of raw material that takes up 40-43% of EMM costs, firm prices of manganese carbonate powder will strongly support EMM prices.
As temperature warms up, operating rates at downstream fertilizer industry are expected to improve to certain extend. In addition, prices of sulphur which is the raw material for the production of sulfuric acid also climbed steadily, supporting sulfuric acid prices to certain extend. Recently, sulfuric acid prices will largely remain stable, and there may have the possibility that producers may raise sulfuric acid prices in the market.
Recently, EMM prices fell steadily and demand for selenium dioxide was negatively affected. Rumors reported that some selenium dioxide suppliers will sell off goods at low prices, exerting greater pressure on selenium dioxide market price, and prices were depressed down. In addition, it was reported that selenium powder suppliers from Europe and India took the initiative to make offers to China's importers, an indication of price decline of selenium powder which is raw material for the production of selenium dioxide. However, prices of selenium dioxide only fell by RMB 20-30/kg, and costs at EMM producers were only down RMB 30-50/kg. (It needs around 1.5-1.8 kg of selenium to produce 1 mt of EMM)
In the context, prices of raw material at EMM producers will remain stable at high levels after a comprehensive analysis, and will strongly support EMM prices.
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