China EMM Imports Soared in February for the First Time, How Will the Market Evolve?

SHANGHAI, Mar 23 (SMM）- According to the latest release of the General Administration of Customs, in February 2022, China's exports of wrought manganese and manganese products as well as unwrought manganese; scrap and powder totalled 26,100 mt, a 25% decrease MoM and an 11% increase YoY. The export volume of unwrought manganese; scrap and powder in February was 18,693.1 mt, a significant decrease of 43% MoM and 9% YoY. The export volume of wrought manganese and manganese products in February was 7,411.7 mt, an increase of 270% MoM and 143% YoY.

In the first quarter of 2022, the domestic EMM prices have been dropping from high. As of this week, the average price in March is expected to drop 28% to around 31,000 yuan/mt, and the corresponding FOB quotation is expected to drop 20% to $4900/mt following domestic prices. And there has been no such negotiations with prices below US$3500/mt in March.

In addition, although China has long been a major exporter of EMM and manganese products, with a monthly export of 30,000-45,000 mt under normal circumstances, domestic manganese prices have soared from the second quarter of 2021 to February 2022, during which time many domestic and foreign enterprises have continued to adjust their procurement cost of raw material. As a result, when manganese flake prices moved between 35,000-40,000 yuan/m, most enterprises chose ferromanganese and silicomanganese as an alternative, hence the demand for high-priced manganese flakes and manganese products weakened.

Local steel mills in Indonesia started to expand their own production lines of manganese-based products, with 70% of the total output for export. Meanwhile, the domestic buyers have more advantages in cost reduction when using imported goods when compared with the domestic high-priced manganese flakes. As such, in February 2022, China's total imports of overseas EMM and manganese products surged 151% compared with January, of which more than 90% of the imports contributed by Indonesia EMM, according to SMM statistics. And SMM expects that China's total imports of EMM in the first quarter of 2022 may be greater than last year's total imports (8513 mt).

Generally speaking, although the domestic high-priced manganese-based raw materials in March saw restricted operating rates and supply, part of the demand has been fulfilled by overseas low-priced goods. In this regard, manganese price slumped to 20,000 yuan/mt or even lower. SMM believes that manganese prices are likely to fall further, and the market shall pay more attention to the demand release and manufacturers’ resumption of production in April.