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Can the Market Expect A Rally in Silicomanganese Prices after Plunging by 32.3%?
Nov 16, 2021 15:47CST
Source:SMM
The National Bureau of Statistics showed that crude steel production in October was 71.58 million mt, down 2.9% month-on-month, and down 23.3% year-on-year;

SHANGHAI, Nov 16 (SMM) - The National Bureau of Statistics showed that crude steel production in October was 71.58 million mt, down 2.9% month-on-month, and down 23.3% year-on-year; crude steel production from January to October was 87.71 million mt, down 0.7% year-on-year; steel production in October was 101.74 million mt, down 0.2% MoM, and down 14.9% YoY; and steel production from January to October was 112.24 million mt, up 2.8% year-on-year; pig iron production in October was 63.03 million mt, down 3.3% MoM and 19.4% YoY; and pig iron production in January-October was 734.07 million mt, down 3.2% YoY.

Manganese alloy demand from the downstream sector is decreasing according to the data released. In January-October, 2021, the real monthly consumption of silicomanganese (including standard silicomanganese, high-silicon silicomanganese and other non-standard silicomanganese) in China totalled 9,021,900 mt, while China’s silicomanganese output in the same period recorded 8,988,000 mt. The demand in October dropped from last from, while the output picked up from September.

As far as SMM understands, the power rationing in major producing areas has been relaxing since mid-October, and the output picked up faster than expected. However, the production restrictions toward downstream steel mills did not improve, leading to less demand in October than a month ago. And the shipments of alloy factories were sluggish. While the prices of manganese alloy has been falling after its peak in mid-October on the back of intensive production restrictions. As of today, the prices have dropped by 4,150 yuan/mt or 32.3%.

SMM believes that there is still possibility for silicomanganese prices to bottom out by end of November or December. Currently, the prices of coking coal and coke are falling, reducing the production costs of manufacturers. However, the manufacturers inventory was high-priced raw materials purchased before, thus the production costs will still remain high in the short term.

For manufacturers in places with cheap electricity, their profitability was tolerable though spot silicomanganese prices are falling. But the manufacturers in places with higher electricity prices in the south are about to suffer losses, thus are planning to reduce or suspend production. As such, the market supply will drop significantly if the prices keep falling. But the subsequently changed supply and demand pattern will later result in a price rally. Nonetheless, the demand may not pick up as the steel mills will enter the seasonal low soon, thus the price rally of silicomanganese will be limited.
 

Silicomanganese

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