SMM analysis on China June SiMn alloy output and July forecast

According to SMM, in June, China's SiMn alloy output was 879,700 mt, up 9.46% MoM but down 9.94% YoY. The output in H1 totalled approximately 4.9455 million mt, down 11.56% YoY. The operating rates in Inner Mongolia, Ningxia, Guangxi, Guizhou, Shanxi, and Yunnan rose. SiMn alloy producers in Inner Mongolia and Ningxia still held low-price, high-grade manganese oxide ore inventories, which resulted in lower production costs compared to those who purchased high-price manganese oxide ore externally. In addition, driven by previous profits, they maintained high operating rates. South China like Yunnan, entering the rainy season, saw lower electricity prices that further reduced SiMn production costs and expanded profits, significantly boosting the enthusiasm of producers. Therefore, the overall SiMn alloy output in China increased in June.

Entering July, most SiMn alloy producers have exhausted their low-price manganese oxide ore inventories and need to purchase high-price manganese ore externally, leading to increased production costs and narrowed profits, even resulting in losses. Additionally, July marks the off-season for downstream steel mills' demand for SiMn, with current procurement volumes lower than in June. Therefore, some SiMn alloy producers in both North and Southern China plan to reduce or halt production. As a result, the overall SiMn output in July is expected to decrease to approximately 854,700 mt.