Industry Association Appealed for Additional Output Cuts to Alleviate Oversupply in Manganese Alloy Industry

SHANGHAI, Jul 25 (SMM) - On July 22, the Manganese Committee of China Ferroalloy Industry Association issued an initiative calling on its members to strictly reduce their output by more than 60% from now on while minimize the purchase of imported manganese ore so as to avoid the risks brought about by high ore prices. The committee also asked its members to be prepared for 3 years of tough years ahead. 
On May 12, the committee called on its members to strictly implement the policy of limiting production by 50% while reducing the purchases of imported ore by 1.2 million mt in order to alleviate the severe surplus of manganese alloys, thereby reducing losses caused by vicious competition within the industry.
SiMn alloy prices in downward trend 
SiMn alloy prices in the spot market continued to fall last week. The quotations in south China were around 7,200-7,300 yuan/mt. 
The most-traded SiMn alloy futures contract hovered at lows recently, standing at 6,956 yuan/mt on July 15, a loss of 23.68% from this year’s peak.   
The output cut initiative came at a time when many SiMn alloy plants are suffering losses from more expensive raw materials bought earlier and falling SiMn alloy prices, thus many SiMn alloy plants are willing to lower their output. The domestic manganese market is currently oversupplied amid poor end demand, said Yu Xiaodan, manganese analyst at SMM. 
Industry reshuffling may accelerate
Despite overcapacity, some companies still have plans to increase production capacity in the future.
In the future, more small producers may withdraw from the market due to financial pressure, while other companies who meet environmental protection requirements will occupy the market share, Yu Xiaodan added.