China Silicomanganese Alloy Market Movement (2013-4-12)

SHANGHAI, Apr. 12 (SMM) – The SiMn 65/17 market was steady this week. The silicomanganese alloy market has been sluggish since steel plants lowering procurement prices for April, with producers mostly reporting high costs and planning to suspend production for maintenance. Enterprises in south China are awaiting electricity price decreases. Prices for SiMn 60/14 and non-standard silicomanganese alloy remained steady, with downstream buyers pushing down procurement prices significantly, and demand has yet to improve. As such, the silicomanganese alloy market is pessimistic in the near term.

According to 2012 earnings reports of listed steel plants, losses of Angang exceeded RMB 4.2 billion, with losses of Masteel nearly RMB 3.9 billion. Baosteel reported profits in 2012, but that is due to assets selling, with profits for major business down by nearly 60%. Steel plants were pushed to losses due mainly to sluggish steel prices and high costs. Despite iron ore prices have been falling recently, inventories at domestic ports continued to fall, with 76.60 million, down 24% from a record high of 100 million. Iron ore prices will have little room to fall further. Since iron ore prices dropped more significantly than steel prices, profits at steel plants improved in Q1, but will fall again so that steel plants will cut output in the foreseeable future. The MIIT plans to eliminate outdated capacity from 19 industries, with a large part in the steel industry.