SHANGHAI, Jul. 29 (SMM) – Domestic EMM prices rose last week due to tight supply and as downstream demand will pick up soon. Some hiked offers to more than RMB 12,300/mt, but traded prices were largely between RMB 12,000-12,200/mt.
SMM expects EMM mainstream traded prices to remain at RMB 12,000-12,200/mt this week for the following two reasons. First, demand overseas will pick up before upcoming summer break and domestic demand will remain stable. Second, inventories over the past two months are being gradually consumed and current prices will not stimulate EMM producers who have halted production to resume operation, so EMM supply will not grow further. These two factors will help EMM prices to hold steady at RMB 12,000/mt.
Markets are now expecting producers in Guizhou and Chongqing’s Xiushan to restart operation once prices rise above RMB 12,300/mt, so any upside space in EMM prices should be limited. The Chinese government has urged greater efforts to eliminate outdated capacity, which may prevent some EMM producers from resuming production. Should this happen, EMM prices will gain further traction.