SHANGHAI, Jul. 19 (SMM) – Mainstream domestic EMM price offers are between RMB 13,500-13,700/mt Thursday, and market participants also reported a price level below RMB 13,500/mt, due largely to market surpluses.
According to SMM sources, current price level RMB 13,500/mt is already below production costs at EMM producers with 60% capacity, while merely 40% capacity can maintain production. According to SMM's earlier statistics, the average operating rate is around 51% at major domestic EMM producers. Based on this, SMM foresees an increasing number of EMM producers will choose to suspend production for the immediate future and that the average operating rate may slip to around 40% in late July.
Production suspension at EMM producers with high production costs in Hunan is relatively common for the time being, with 70% capacity there halted. Meanwhile, most producers in Guangxi have also stopped operation while merely a few producers stay in operation. SMM sees a possibility of more EMM producers halting production in the near future.