SMM EMM Weekly Price Forecast (13-17 May, 2013)

SHANGHAI, May 13 (SMM) – 

 

EMM market should remain sluggish this week. The marginal costs of EMM are now around RMB 13,000/mt. EMM supply has increased notably, but high raw material prices and the fact that power tariff in some regions has not yet been lowered are providing cost support to EMM prices. However, if demand remains tepid, oversupply pressure of EMM will increase. Power tariff in Guizhou will be lowered with the onset of rainy season, which will reduce costs for EMM producers. As such, EMM prices may continue to fall.  

 

SMM notes no reason for optimism for domestic EMM market in May. First, on the supply side, EMM output across China has now hit some 98,000 mt. Second, with respect to demand, EMM exports showed signs of contraction in April and may continue to shrink in May. Besides, this situation is compounded by decreased purchases from #200 stainless steel producers. Third, as regards costs, although prices declines in manganese ore and other raw materials are limited, EMM production costs will drop around RMB 300/mt if electricity prices are lowered with the onset of rainy season. To sum up, EMM prices will face great downward pressure in May. SMM anticipates a RMB 300-400/mt decline in EMM prices to RMB 12,800-12,900/mt in May. EMM export prices are expected at USD 2,200-2,220/mt due to sluggish consumption overseas.