China EMM Market Weekly Forecast (Oct. 29-Nov.2)

SHANGHAI, Oct. 26 (SMM) – Electricity prices were hiked by RMB 0.05/kwh at EMM producers in Guizhou, increasing production costs at producers by RMB 350/mt. According to SMM sources, 8 producers were forced to halt production costs due to high production costs, affecting output by 8,000 mt per month. In this context, operating rates at Guizhou province fell to around 25%.
 
Guangzhou province will also enter into low-water period, but local operating rates remained stable. In addition, operating rates at producers in Hunan, Chongqing, Hubei and Ningxia were stable. Supply of EMM will reduce, while downstream purchases will remain stable. According to SMM sources, purchase for EMM from #200 stainless steel mills did not change in November.
 
SMM believes that higher production costs and lower operating rates will lend strong support for EMM prices. However, since EMM was in oversupply, the operation halt in Guizhou province will not ease oversupply pressure in the short term.  Meanwhile, EMM price hike was higher than cost increase. SMM thus expects that EMM prices may face risks to fall and shall find support at RMB 12,500/mt in the following week.