[SMM Analysis] when the Price of supply and demand Game of Silicon and Manganese production will rebound in November

Since the end of August, silicon manganese spot decline, monthly steel decline gradually increased, November steel decline is more than 1000 yuan / ton, surprising.

回顾年中，钢厂的高需求与合金厂的低库存出人意料，需大于供的格局快速哄抬硅锰价格；同样出人意料的是，价格的回暖使得大量差能于7月集中复产，贵州、广西、宁夏等地现货大量涌现，加之原本计划产能的新增，使得市场供给极速增长，硅锰月产量一度创下历史新高，而钢厂需求逐渐回归，相向而行的供需关系渐行渐远，硅锰价格终于“跳水”。

In terms of silicon and manganese production, due to the high output for three consecutive months, the stock of silicon and manganese in the south (main Guizhou area) and the north (part of Ningxia) is relatively high, and many manufacturers are under pressure to ship the goods. Continued decline in the market, spot inventory early below the cost line, some northern manufacturers said that due to the previous more futures mines, manganese ore prices did not sink significantly, spot costs of about 6400 yuan / ton, in order to prevent further expansion of losses, in November manufacturers have begun to "self-help", the north, the south in turn began to overhaul, reduce production.

As of November 13, according to the preliminary comprehensive statistics of SMM, a total of 25 units in the northern region (including Inner Mongolia, Ningxia, Shanxi, Liaoning and Shaanxi), including 13 in Inner Mongolia, 8 in Ningxia, 2 in Shanxi, 1 in Liaoning and 1 in Shaanxi (covering shutdown and explicitly reducing the operating rate), with a monthly output of about 118000 tons, and a total of 12 units in the south (including Guangxi, Guizhou, Chongqing and Yunnan), with a monthly output of about 29000 tons. The theoretical output of silicon and manganese in the whole country has been reduced by about 147000 tons, but SMM found that although many northern manufacturers have overhaul and shutdown behavior and plans, they have increased the operating rate of other mine heating furnaces at the same time. In order to maintain the order and production demand, the impact of the actual output in the north is about 90% of the theoretical reduction.

另外值得一提的是，此前北方有检修矿热炉以及南方炉型改造已完成，涉及矿热炉2台，月产量约0.7万吨，近日存在复产可能。

In October 2019, the PMI composite index was 51.19, down 1.69 from a month earlier and 4.57 from a year earlier. After the quarterly adjustment, the composite index was 48.63, down 0.26 from the previous month and 4.75 from the same period last year. To sum up, the PMI composite index in October was higher than 50 before the season and below the 50 withered line after the season. Seasonal factors had a significant impact on the downstream industry. October continued the traditional peak season, stimulating downstream demand to a certain extent. The overall production situation was better than last month, but the range was limited. This month, the composite production index was 51.68, up 0.19 from the previous month, down 13.35 from the same period last year. With the exception of the construction industry and shipbuilding industry, other industries have increased to varying degrees due to sustained strong demand. The index of new orders was 52.62, down 5.40 from the previous month and 5.06 from a year earlier. With the advent of the traditional peak season, in addition to shipbuilding, new orders in all industries have continued to improve. The shipbuilding industry is mainly focused on completing hand-held orders this year, and new ship orders have dropped significantly compared with the same period last year.

As a result, based on advanced data, crude steel and steel bar production is expected to remain at 8100-82 million tons and 2000-21.5 million tons in October and November, with demand positive compared with the same period last year, but month-on-month demand maintaining a downward trend.

To sum up, under the condition that the upstream manganese mine cost remains stable, the price of silicon and manganese will maintain a relative balance between supply and demand in the short term, and due to futures reasons, there may be a small rebound space for silicon and manganese spot. Previously, the absolute pessimism of the market has been improved to a certain extent.