Supply-demand surplus weighed on the market; this week, EMM weakened and ground lower [SMM EMM Weekly Review]

This week, the domestic electrolytic manganese market consolidated on a subdued note overall, with spot prices pulling back slightly. The tug-of-war between longs and shorts in the market intensified, presenting a pattern of weak operation overall.

The cost side still provided strong rigid support, with core raw material prices such as manganese ore and sulphuric acid remaining firm. Coupled with the ongoing phased production cuts at small and medium-sized smelters and the willingness of leading large plants to hold prices firm, the room for deep market decline was effectively contained, and the bottom support for market prices was relatively solid. However, after entering July, enterprises in producing regions resumed production intensively, market supply steadily grew, the industry operating rate and social inventory rose simultaneously, and the overall supply-demand pattern trended looser. The demand side was in the traditional consumption off-season, with the downstream stainless steel and lithium battery industry chains only maintaining a hand-to-mouth purchasing model. There were no concentrated restocking actions in the market, and end-user wait-and-see sentiment was strong. Moreover, this month, steel mill tender volumes contracted while the push for lower prices intensified, heightening downstream cautiousness in purchasing. Market retail quotations continued to loosen, and the center of spot transactions shifted downward continuously. In addition, recent frequent typhoons along the coast caused phased port closures and traffic restrictions, disrupting the pace of export shipments and weakening export deal follow-through, further weighing on overall trading sentiment.

Overall, high raw material prices underpinned the lower bound of market prices. However, the concentrated emergence of multiple bearish factors in July—supply growth release, weak off-season demand, reduced and price-suppressing steel mill tenders, and logistical disruptions—will cause the short-term electrolytic manganese market to continue its operating trend of consolidating on a subdued note and grinding slightly lower.