70% of Market Insiders Optimistic about Future Silicomanganese Prices

SHANGHAI, Apr. 25 (SMM) – As April ends, steel plants will conduct bidding work very soon. In this context, can silicomanganese prices increase? With regard to this, SMM conducted a survey of 40 domestic silicomanganese producers, traders, and steel plants, which revealed the following insights: 

Affected by increasing manganese ore prices on the LME, domestic manganese prices have also inched higher. Silicomanganese producers thus raised price quotations owing to the rising production costs, but traded prices failed to advance significantly. Hence, 70% of these surveyed market insiders are optimistic about future silicomanganese prices, which is due largely to the fact that increasing manganese ore prices pushed up production costs. Some silicomanganese producers expect production costs will increase by around RMB 200/mt and that bidding prices from steel plants will rise by RMB 200/mt during May. Nevertheless, due to pessimistic steel markets, an increase of RMB 200/mt is unlikely, but a rise of RMB 50-100/mt is possible. Besides, as silicomanganese prices have been on a downside track and hovering around production costs since last October, some producers in South China are forced to scale back or even halt operation. As the pace of consumption at silicomanganese producers and traders is slow for a prolonged period, silicomanganese inventories are low from past years.

23% of the insiders contacted by SMM hold the view bidding prices from steel plants will remain flat in May, since they believe silicomanganese producers have basically no say in negotiations with steel plants. Steel plants are bidding down purchasing prices of raw materials owing to a slack steel market, so silicomanganese producers have to squeeze profit margins. Some silicomanganese producers will likely see falling electricity prices since normal-water period will arrive, and thus have chances to cut production costs.

The remaining 7% insiders cannot predict about future silicomanganese prices.