Silicomanganese Alloy Market Review and Forecast (Dec. 24-28)

SHANGHAI, Dec. 28 (SMM) –

Review
This week was the procurement period for steel plants, so SiMn 65/17 prices were not seen to experience major changes. Hebei Iron & Steel Group set silicomanganese alloy bidding prices Friday at RMB 7,350/mt for January in the form of acceptance bill, up 50/mt MoM, with the bidding amount estimated at 29,200 mt, down 700 mt MoM. In this context, some producers quoted RMB 50/mt higher the same day. However, prices for both SiMn 60/14 and non-standard silicomanganese alloy edged down RMB 50-100/mt owing to slack demand.

Mainstream ex-works prices for SiMn 65/17 were RMB 6,900-7,000/mt in the form of acceptance bill in Guangxi, and RMB 7,000-7,100/mt in Inner Mongolia. Mainstream ex-works prices for SiMn 60/14 were RMB 5,550-5,600/mt (excluding tax) in Guangxi’s Guilin, and RMB 5,400-5,500/mt (excluding tax) in Chongzuo and Baise. Ex-works prices for #58 silicomanganese alloy were RMB 5,350-5,400/mt (excluding tax) in Hunan.

Supply
Operating rates at silicomanganese alloy producers this week witnessed no considerable changes and stayed between 70-80% at producers in Inner Mongolia and Ningxia. Nevertheless, with the year’s end nearing, some producers and traders opted to move goods aggressively to generate cash, keeping spot market supply plentiful. Silicomanganese alloy bidding prices from Hebei Iron & Steel Group were in line with market expectation, so SMM believes that operating rates at silicomanganese alloy producers in north China will remain stable in the coming week. Electricity prices in south China will likely be adjusted in the coming week, which will slightly impact operating rates at producers there.

Demand
Steel prices inched up this week. Prices for HRB335 rebar of 16-20mm averaged RMB 3,615/mt, also up marginally from a week ago, while the average price for hot-rolled steel gained slightly by 1% compared with a 1.2% increase seen the previous week. In the coming week, relatively ample cash flows, and climbing iron ore and coke prices will help steel prices increase. But steel stocks are expected to rise in south China amid sluggish demand, capping any upside room in steel prices. Collectively, SMM believes that steel prices will mainly march slightly higher in the coming week.

From the released bidding amount of silicomanganese alloy and SMM survey, steel plants will prepare for stocks for the Chinese New Year holiday during January and have high demand for SiMn 65/17. The activity on the silicomanganese alloy market will become more active in the coming week due to procurement period for steel plants.

According to CISA data, the daily crude steel amount was 165.69 mt at major steel plants during the first half of December, up 0.98% from the second half of November. China’s total daily crude steel amount was 1.945 million mt during the first half of December, down 0.76% from the second half of November. Shrinking output at small steel plants resulted a drop in demand for SiMn 65/17 and non-standard silicomanganese alloy. Demand for silicomanganese alloy in the coming week is likely to remain sluggish since few small plants chose to build up stocks ahead of the New Year holiday.

Cost
Imported manganese ore prices stayed comparatively steady this week.

There was rumor that electricity subsidy will be cancelled in Gansu, but electricity prices may be slashed by RMB 0.0567/kwh in Guangxi in the coming week. Prices of coke particle and semi-coke maintained stable this week. Semi-coke stocks remained high at some producers and led to modest market transactions. Ex-works prices for semi-coke in Shaanxi’s Fugu were still between RMB 910-920/mt (in cash, including tax). 

Forecast
More steel plants will release their bidding prices for silicomanganese alloy in the coming week, which are expected at RMB 7,350-7,400/mt in north China and RMB 7,400-7,500/mt in Jiangsu and Zhejiang. In spot markets, SiMn 65/17 will probably increase by around RMB 50/mt in the coming week, but prices for both SiMn 60/14 and non-standard silicomanganese alloy have the possibility of slipping marginally.