SHANGHAI, Jan. 28 (SMM) – Supply of EMM reduced significantly in early January due to increased purchases after cancellation of EMM export tariff, which sent EMM prices higher. After middle January holiday, wait-and-see sentiment grew, and transactions of EMM stagnated.
SMM believes that EMM prices are likely to advance slightly after Chinese New Year holiday due to the following factors.
Demand: As #200 stainless steel mills only purchased EMM in limited amount before holiday, their purchases will increase after holiday.
Supply: Although most EMM producers will not halt production during Chinese New Year holiday, some producers reporting tight manganese ore have plan to suspend production, which will drag down operation rate at EMM producers.
Cost: Due to tight cash flow at the end of the year, most producers only purchased manganese ore for only one month consumption. Therefore, they have to purchase manganese ore after holiday. However, operating rates at mine operators will be low as migrate workers will not return on time. The increasing demand and reducing supply will push up manganese ore prices higher.
Taken above, SMM expects that EMM prices will slightly advance after Chinese New Year holiday, but will meet resistance at RMB 13,500/mt.