SHANGHAI, Jun. 21 (SMM) – The average operating rate during June at major domestic EMM producers was around 49%. According to SMM estimation, market supply and demand is basically in balance when the average operating rate is around 45%. Hence, the supply in domestic EMM markets slightly exceeds demand this week.
SMM estimates that the average cost at the surveyed EMM producers is roughly RMB 14,500-14,600/mt this week. Electricity subsidy policy in Guangxi helps costs at producers there narrow its difference with the average cost at Chinese EMM producers. However, the average production cost at Chinese EMM producers fails to fall noticeably, as operating rate at producers in Guangxi is relatively low and accounts for a small portion in China's overall output. Furthermore, according to SMM sources, producers in Guizhou's Songtao, Hubei, and Ningxia enjoy considerable advantages in production costs, and producers in Guangxi have advantages in ore prices. Producers in Hunan report no advantages in production owing to higher electricity prices and have no preferential ore prices either.
As EMM supply surpasses demand at present, domestic EMM prices are pessimistic, but any downside room will be limited. Chinese EMM prices are estimated to fluctuate between RMB 14,500-14,600/mt in the coming week.