China SiMn Alloy Production to Fall Further in July after 12% Decline in June under Cost Pressure

SHANGHAI, July 11 (SMM) –  China’s SiMn alloy output totalled 825,500 mt in June, a drop of 12% MoM and 18% YoY, SMM data showed. The output totalled 5.53 million mt from January to June, a year-on-year decrease of 6%. Although the domestic pandemic was basically brought under control in June, the end demand was still weak and steel mills extended their maintenance time, resulting in weak demand for SiMn alloy and accumulation of spot SiMn alloy inventories. SiMn alloy prices kept falling last month, and approached the costs of producers. Cost pressure discouraged SiMn alloy plants from selling at much lower prices. As a result, many small SiMn alloy plants in north China who focused on retail sales were closed, while many others reduced production by about 20% while maintaining long-term orders. In south China, small SiMn alloy plants were also shut down under cost pressure, except for those in Guangxi who enjoy preferential electricity prices.

In July, the domestic SiMn alloy output is expected to be 789,300 mt. HBIS Group lowered its SiMn alloy purchase prices. Given the oversupply, spot SiMn alloy prices may not rebound. Therefore, SiMn alloy plants will lack incentive to resume production and may even reduce production further.