SHANGHAI, Sep 28 (SMM) - SMM has conducted a survey on the impact of the power rationing on the manganese industry. Let’s see what impact the policy has on the entire industry chain.
Regions implementing power rationing
Inner Mongolia, Ningxia, Guangxi, Guizhou
Brief on power rationing
On September 23, the Ulanqab Power Grid issued the estimated shortages of the system and an early warning of orderly power consumption for September 23-27. The Ulanqab Power Grid expected the power shortages to stand at 8.89 million kWh, 7.49 million kWh, 4.39 million kWh, 7.09 million kWh and 6.09 million kWh, respectively, from September 23-27. Off-peak and orderly power consumption is required to be implemented with the quotas of 3.88 million kWh, 3.72 million kWh, 2.86 million kWh, 3.72 million kWh and 3.61 million kWh, respectively.
Impact and analysis on the supply side
The key producing areas of silico-manganese alloys, including Inner Mongolia, Ningxia, Guangxi and Guizhou, have been affected to different degrees by the power rationing and production restriction policy. The consumption of manganese ore was slow. The prices of manganese ore were relatively stable in the middle of the month. As the prices of downstream silico-manganese alloy continued to rise, the prices of manganese ore also climbed at the end of the month.
Impact and analysis on downstream operating rate
Affected by the continuous power rationing and production restriction, most manufacturers in Inner Mongolia have negotiated for a delay in the delivery to steel mills; the output in Ningxia, where the impact from the dual control of energy consumption is significant, was affected by 15-20% due to the power supply factor. Almost all the plants in Guangxi suspended production in September. The power rationing in Guizhou remains underway, except for an improvement in Xinyi. The current spot supply is tight, while downstream demand is relatively strong. If the current power rationing continues, major ferro-manganese alloy plants are unlikely to complete the outstanding orders for August and September until October.
Impact on end-users and feedback from companies
The insufficient output of silico-manganese has tightened the spot supply. The bidding solicitation prices of steel mills has increased significantly compared with the previous month.
The impact on price trends and market outlook analysis
Although major steel mills were also reducing production in September, the decline in manganese alloy output was more than that of steel mills. SMM believes that the prices of silico-manganese will continue to climb to new highs at the end of September and in October if the power rationing in the main production areas fails to improve.
Price gains during the year
The prices of 65/17 silico-manganese alloy in Inner Mongolia have risen by 70.59% since the beginning of the year.