Crude Steel Output Decreased 22% YoY on Nov, Will Silico-Manganese Market Pick Up？

SHANGHAI, Dec 17 (SMM) – According to the National Bureau of Statistics, crude steel output in November was 69.31 million mt, a decrease of 3.2% month-on-month and 22% year-on-year. From January to November, the output of crude steel was 946.36 million mt, a year-on-year decrease of 2.6%. Steel products output in November was 101.03 million mt, a decrease of 0.7% on the month and a year-on-year decrease of 14.7%. The output of steel products from January to November was 1,223.33 million mt, a year-on-year increase of 1%.

The output of pig iron in November was 61.73 million mt, a decrease of 2.1% from the previous month and a year-on-year decrease of 16.6%. The output of pig iron from January to November was 796.23 million mt, a decrease of 4.2% year-on-year.

The downstream demand for silicomanganese alloy has trended lower. From January to November 2021, China’s total monthly actual consumption of silico-manganese (including regular silico-manganese, high-silicon silico-manganese and other non-standard silico-manganese) totalled 9.73 million mt. And China’s silico-manganese output from January to October 2021 was 9.79 million mt. The demand weakened slightly, while the output increased significantly.

As far as SMM understood, the market demand has been weak since mid-October, while the supply has gradually increased. The supply and demand is current imbalanced. In this scenario, steel mills have pushed for lower procurement prices. And the spot transactions in the market have been quiet. The profits of silico-manganese have also fallen from a peak of 3,000-4,000 yuan/mt to 100-200 yuan/mt, or even turned into losses. Most plants with high inventories are pessimistic over the market, with the exception of those that mainly sold under long-term contracts.

The production restrictions driven by the Winter Olympic Games at the alloy plants in north China are still unclear. The market believes that production restrictions will change the market supply and demand, hence the spot prices may rally. However, SMM believes that given a severe imbalance between the supply and demand, if the demand from terminal steel mills cannot recover, the impact on spot prices will not be significant even if the output of manganese alloy decreases.