Profit, supply concerns boost prices of silico-manganese in Mar-Shanghai Metals Market

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Profit, supply concerns boost prices of silico-manganese in Mar

SMM Insight 06:59:28PM Mar 27, 2019 Source:SMM

SHANGHAI, Mar 27 (SMM) – Prices of silico-manganese alloy in Chinese markets rose in March as previous lows that thinned profit margins prompted sellers to hold offers firm, and as developments at some major production areas grew worries about future supplies.

In March, offers by silico-manganese producers rose 200-300 yuan/mt from February and gained 50-100 yuan/mt on a weekly basis, SMM research found.

Prices of silico-manganese stayed at lows in February, and pushed profits at most producers towards, or even into negative territory. This accounted for reluctance across producers to lower prices in trade negotiations.

Fewer supplies also contributed to higher silico-manganese prices. Power supply controls in Inner Mongolia, substandard capacity closure and environmental inspections in Ningxia raised market concerns about future supplies and prompted producers and traders to hold back from offloading cargoes.

Market supplies were also lowered by delivery demand. Prices of futures climbed earlier this month with the 1905 contract on the Zhengzhou Commodity Exchange hitting a nearly four-month high of 7,968 yuan/mt on March 12. Producers put their cargoes on warrants for May delivery and lowered supplies to the physical market.

SMM believes that prices of silico-manganese have stabilised and will see limited upside room.

Producers’ bids for April purchasing tenders from steelmakers were heard around 8,000 yuan/mt in acceptance, including transport costs. This stood near the levels before the Chinese New Year holiday. A large steel mill in the north purchased silico-manganese at 7,900 yuan/mt in January tender. This is also largely in line with producers’ current ex-factory offers in cash.

Full-capacity operation in Ningxia and the restarts of southern producers during late-March and early-April will help offset the supply decline in the north. For steelmakers, narrower profit margins will keep them from accepting a sharp increase in prices of silico-manganese.

SMM learned that electric furnaces in Ningxia did not operate at full capacity. Achieving full capacity will likely allay the impact from the shutdown of substandard furnaces.

Weaker-than-expected supply trouble and buyers’ strong rejection to much higher prices are expected to keep prices of silico-manganese from growing significantly.

A northern steel mill told SMM that 8,000 yuan/mt is the lowest level for them can accept in silico-manganese 6517 purchasing tender.

Production curbs on environmental concerns across Tangshan, Handan, Shanxi and Jiangxi also weighed on steel production and lowered demand for silico-manganese.

Profit, supply concerns boost prices of silico-manganese in Mar

SMM Insight 06:59:28PM Mar 27, 2019 Source:SMM

SHANGHAI, Mar 27 (SMM) – Prices of silico-manganese alloy in Chinese markets rose in March as previous lows that thinned profit margins prompted sellers to hold offers firm, and as developments at some major production areas grew worries about future supplies.

In March, offers by silico-manganese producers rose 200-300 yuan/mt from February and gained 50-100 yuan/mt on a weekly basis, SMM research found.

Prices of silico-manganese stayed at lows in February, and pushed profits at most producers towards, or even into negative territory. This accounted for reluctance across producers to lower prices in trade negotiations.

Fewer supplies also contributed to higher silico-manganese prices. Power supply controls in Inner Mongolia, substandard capacity closure and environmental inspections in Ningxia raised market concerns about future supplies and prompted producers and traders to hold back from offloading cargoes.

Market supplies were also lowered by delivery demand. Prices of futures climbed earlier this month with the 1905 contract on the Zhengzhou Commodity Exchange hitting a nearly four-month high of 7,968 yuan/mt on March 12. Producers put their cargoes on warrants for May delivery and lowered supplies to the physical market.

SMM believes that prices of silico-manganese have stabilised and will see limited upside room.

Producers’ bids for April purchasing tenders from steelmakers were heard around 8,000 yuan/mt in acceptance, including transport costs. This stood near the levels before the Chinese New Year holiday. A large steel mill in the north purchased silico-manganese at 7,900 yuan/mt in January tender. This is also largely in line with producers’ current ex-factory offers in cash.

Full-capacity operation in Ningxia and the restarts of southern producers during late-March and early-April will help offset the supply decline in the north. For steelmakers, narrower profit margins will keep them from accepting a sharp increase in prices of silico-manganese.

SMM learned that electric furnaces in Ningxia did not operate at full capacity. Achieving full capacity will likely allay the impact from the shutdown of substandard furnaces.

Weaker-than-expected supply trouble and buyers’ strong rejection to much higher prices are expected to keep prices of silico-manganese from growing significantly.

A northern steel mill told SMM that 8,000 yuan/mt is the lowest level for them can accept in silico-manganese 6517 purchasing tender.

Production curbs on environmental concerns across Tangshan, Handan, Shanxi and Jiangxi also weighed on steel production and lowered demand for silico-manganese.