SMM Weekly Forecast on China's EMM Market

SHANGHAI, Jun. 11 (SMM) --

Supply

Operating rates at EMM producers were down to 29.3% at Xiangxi (West Hunan) region in Hunan province and operating rates were only 35% at Tongren region in Guizhou province, as current market prices are lower than production costs. With the intensified implementation of electricity price adjustment at various regions, more and more producers will halt production given that costs are higher than selling prices. Although prices of complementary materials like sulfuric acid and selenium dioxide were slightly lower, any impact from the price changes of complementary materials will be limited. In this context, costs at EMM producers will remain stable at high levels. 

Demand

The number of stainless steel producers to halt production will continue to increase, as market was sluggish and inventories were still high at #200 stainless steel mills. It is expected that purchases from most stainless steel companies will be limited. Ferroalloy industry will further cut production, and purchases from ferroalloy industry will also be limited. Meanwhile, traders also will make limited purchases due to sluggish market situation.

Analysis

Producers will receive support from significantly supply reduction and from high cost pressure, while demand from stainless steel mills and ferroalloy industry will be limited due to sluggish demand. Domestic EMM prices will stagnate under the context that demand for EMM hasn't improved temporarily. It is expected that EMM prices will move around RMB 14,500/mt, waiting for demand to improve in the future.

To contact the writer on this report: jianghanmei@smm.cn

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