SHANGHAI, Mar. 26 (SMM) --
Demand
SMM conducted a survey on operating rates at 74 EMM producers this month, and the survey shows the result that overall operating rates at EMM market are 71%, down 3.2% from the level in February. In addition, most EMM producers don't have relatively high inventories for a better cost control, and EMM prices will not be depressed in the short term as supply of EMM was not oversupply significantly in the short term. Raw material: tight supply of ore powder don't improve despite that weather gradually warms up and operating rates at EMM producers gradually have improved at ore powder producers, and high demand and low supply of ore powder will still unchanged in the near term. In addition, prices of supplementary materials like sulfuric acid also climb up stably. In this context, relatively high costs at EMM producers will prevent EMM prices from falling significantly in the short term.
Supply
According to SMM survey, operating rates at mainstream #200 stainless steel mills are as high as 80%, but most producers only make purchases on an as-needed basis due to current sluggish stainless steel industry as well as frequent fluctuation of domestic EMM prices, and few producers plan to replenish raw material stock in a large amount. Operating rates at small and medium sized producers in Ningbo, Dainan are not optimistic, and a portion of stainless steel mills have no competiveness in the market when the industry is sluggish and prices of raw material and costs are high, so most of them adopted a wait-and-see attitude before making any plan.
Summary
Operating rates at large stainless steel mill remain flat, and demand from these mills will prevent domestic EMM prices from falling significantly. However, whether domestic EMM prices will climb or not shall depend on operating rates at small and medium sized stainless steel mills. In this context, SMM believes that momentum for EMM prices to climb is weak, based on the current operating rates at stainless steel mills. It is expected that EMM prices will move narrowly around RMB 15,000/mt again as current trading sentiment between suppliers and purchasers was stagnant.
To contact the writer on this report: jianghanmei@smm.cn
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