SHANGHAI, Nov. 23 (SMM) –

Review
SiMn 65/17 prices edged higher this week. Main producers of SiMn 65/17 quoted ex-works prices between RMB 7,000-7,100/mt in the form of acceptance bill, but actual traded prices were RMB 6,900-7,100/mt in north China and RMB 6,850-7,000/mt in south China. SiMn 60/14 and non-standard silicomanganese alloy prices remained stable, and mainstream traded prices for SiMn 60/14 in Guangxi were RMB 5,550-5,650/mt (ex-works prices and excluding tax).

Some steel plants announced bidding prices for silicomanganese alloy prices, with Jiangsu Yonggang Group quoting ex-works prices at RMB 7,400/mt in the form of acceptance bill and CITIC Pacific Special Steel Holdings at RMB 7,300/mt. Shagang Group is expected to quote final prices at RMB 7,400/mt. Steel plants in north China have yet to confirm purchasing prices. Steel plants’ purchasing prices were mostly between RMB 7,300-7,400/mt in recent days, up around RMB 100/mt from a week ago. 

Supply
Operating rates at silicomanganese alloy producers this week increased in north China but fell in south China. The number of producers maintaining production in north China increased slightly last week, easing tight market supply to some extent. Operating rates at producers in Guizhou, were stable, but decreased marginally at producers in Guangxi. There were 11 new producers commencing operations in Hunan’s Yongzhou during November. Spot market sources were plentiful in south China, but owing to high costs, producers generally quoted high prices.

Demand
Steel prices marched down this week, with prices for HRB335 rebar of 16-20mm averaging RMB 3,735/mt, down about RMB 27/mt or 0.7% from the prior week. Prices for hot-rolled steel also slipped, and fell by roughly 1.6%, compared with a gain of 2.3% in the previous week. Spot steel markets remained weak this week owing to significantly falling steel billet prices the previous week, but still compelled traders holding low-quality goods to move goods aggressively. In the face of sufficient market supply and growing cash flow pressures, SMM anticipates spot steel prices to drop in the coming week. The concentrated procurement period will arrive in the coming week, and declines in steel prices in the coming week will somewhat bring negative impact to silicomanganese alloy prices.   

Cost
Prices for some kinds of imported manganese ore were slightly raised by USD 0.5-1/mtu this week.

According to sources, Guangxi increased electricity prices considerably during November, dampening silicomanganese alloy producers’ enthusiasm in production. The Guangxi government then began issuing subsidies based on the volume of production, RMB 100-200/mt for producers in some counties and RMB 0.03-0.05/kwh.

Market transactions for coke particle and semi-coke were modest this week, and ex-works prices for semi-coke in Shaanxi’s Fugu were RMB 910-920/mt (in cash, including tax).

Forecast
Major steel plants will purchase silicomanganese alloy for December in the coming week, and Jiangsu Yonggang Group and Shagang Group will generally set purchasing prices for Zhejiang and Jiangsu, with mainstream purchasing prices expected at around RMB 7,400/mt, up RMB 250/mt. Hebei Iron & Steel Group may also start to bid purchases for December in the coming week, with ex-works prices expected between RMB 7,200-7,300/mt in the form of acceptance bill. Mixed price quotations will likely improve in the coming week, and traded prices for spot silicomanganese alloy will also probably march slightly higher. But any increases will be limited since current spot prices have become around RMB 200/mt higher than steel plants’ purchasing prices during November.