SHANGHAI, Jun. 4 (SMM) --
Costs at EMM producers continued to climb as electricity prices were lifted up at some regions, but the powder price decline as well as electricity price cut helped ease EMM producers' cost pressure to certain extent. With regard to EMM output, more and more producers planned to halt production as EMM prices lingered at low level but costs climbed all the way, resulting in reducing supply of EMM in the future.
The number of stainless steel producers to halt production increased as #200 stainless steel situation was sluggish with high inventories, and it is expected that purchases from most stainless steel companies will be limited. Ferroalloy industry also faces pressure to cut production, as producers were heavily weighed by sever electricity prices adjustment from National Development and Reform Commission (NDRC), production cut from stainless steel mills as well as elimination of outdated capacity by the Chinese Government, also resulting limited purchases for EMM. Meanwhile, traders also will reduce purchases due to sluggish market condition.
Although the reduced supply as well as high producing cost still lent relatively strong support for EMM prices, the impact from costs on EMM prices will gradually wane as more and more stainless steel mills will halt production to conduct unit maintenance due to high inventory level at domestic large scale #200 stainless steel mills.
The significant reduce of demand will provide room for EMM prices to fall further, and prices are expected to fall around RMB 14,000/mt.
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