SHANGHAI, Apr 15 (SMM) - China electrolytic manganese metal (EMM) real output stood at 23,000 mt in March. Although it increased slightly from February, the operating rates were still quite low at around 10%. The average ex-factory price of spot EMM (in major producing areas) dropped 31% MoM to 26,000 yuan/mt in March in light of weak demand.
In terms of market performance, the average operating rate was less than 10% in January and February, hence the inventory kept dropping during this period. As of mid-to-late March, some domestic manganese factories resumed work as planned, and the supply gradually picked up. In terms of demand, the influence of Russia-Ukraine conflict and the terminal’s refusal to high prices have both strengthened, and the demand for manganese metal weakened. In this scenario, manganese prices dropped below 20,000 yuan/mt, with a few traded at 15,000 yuan/mt. Also, the willingness to purchase unqualified and low-level manganese products weakened, and the supply and demand sides tended to negotiate and purchase rationally. SMM believes that the overall manganese prices were not that firm in March. With the expected increase in the operating rates in April, manufacturers will mainly focus on making shipments, and the price reduction may continue.
In terms of exports, the average FOB price of EMM fell by nearly 30% month-on-month in March, and the negotiated prices with overseas were around 4,389 yuan/mt. Although there were inquiries from ocean-going and near-ocean buyers during the month, the transactions were not clearly finalised during the continuous price reduction. In addition, the operating rates of EMM production lines in Indonesia have been high and the prices were relative low, which was more attractive to overseas traders looking for goods at low prices. Therefore, some domestic EMM export orders flowed to Indonesia in March. SMM expects that overseas export quotations will remain unchanged in April, and are expected to fall slightly.
Although the overall profit of the domestic EMM industry dropped significantly in March, it was still relatively high at 30-40%. SMM believes that in the near future, most manufacturers will lower their prices to promote the sales. The increase in the prices of industrial-grade sulphuric acid and other raw materials is bound to suppress the profits of sellers. Hence it is expected that the profitability in April will continue to decline from the previous month.
