Silicomanganese prices weaken after environmental probes end

SHANGHAI, Jul 10 (SMM) – Silicomanganese alloy prices in the Chinese spot market weakened over the past week as expectations of supply growth grew after the central government’s month-long environmental reviews ended, SMM learned.

As of Tuesday July 10, SMM assessed silicomanganese alloy prices in the north at 8,175 yuan/mt ex-factory in acceptance, down 125 yuan/mt from July 2.

Silicomanganese producers in Ningxia province that passed environmental checks stepped up production after the inspectors left while those that were required to suspend and rectify are unlikely to recover production in the near term.

More than half of overall producers in Guangxi province ceased production during the probes, as they had smaller furnaces and as they failed to meet standards. Some are expected to resume production on Thursday July 12 or Friday July 13, while those that have not obtained production permits are likely to take more time to rectify.

Manganese ore inventories at Tianjin and Qinzhou ports have grown since late May. This suggests that operating rates are poor across medium-sized or small silicomaganese producers who are major consumers of spot manganese ore. Large silicomaganese producers that rely less on spot ore resources also showed little purchasing interest given the high prices.

With high profit margins of silicomaganese, we see limited downward room for prices as increasingly stringent environmental inspections make it more challenging to resume production. High costs and inventories also continue to keep manganese ore traders on their toes.