SMM Analysis: China Spot EMM Price to Drop Slightly

SHANGHAI, Jun. 15 (SMM) – Decline in spot EMM price eased this week in China’s market after one-week consecutive decrease. For now, some EMM producers give firm offers successively, but low offers also come up frequently. SMM survey finds market participant have different views on spot EMM price.

Ex-works price of spot EMM slumped last week, down to 10,800 yuan per tonne as of June 8, with traded price as low as 10,500 yuan per tonne heard, raising market pessimistic outlook. Moreover, low purchase prices offered by steel mills also weigh down the market, such as Shanghai Baosteel offered price to factory at 11,300 yuan per tonne by acceptance, or equal to ex-works cash price at 10,700 yuan per tonne.

China’s spot EMM price stops falling, but is not likely to rally. Spot EMM price has entered cost territory at most producers after it fell below 11,000 yuan per tonne, with mainstream offers at around 10,800-11,000 yuan per tonne at present and anticipation of main traded price at 10,700 yuan per tonne. Some producers, suffering price shrink, give firm offers due to tight supply, and held back sales at low prices. On the other hand, some large producers keep supplying low-priced goods, which weigh down spot EMM price.

Some market participants expect EMM price to stabilize after continuous sharp declines, and traded price of some high-grade goods will exceed 11,000 yuan per tonne. Buyers, who are in a rush to purchase goods, will be hard to see low-priced goods. EMM price will rally soon in face of cost support, no further decrease in downstream demand and supply shortage.

While others forecast price to drop further due to low offers and sluggish transaction, despite of an improvement in price decrease on a weekly basis and difficulty on low-priced goods purchase. Buyers are suggested to take wait-and-see stance.

EMM price will drop slightly in a near term, but the decline will be limited, SMM manganese analyst forecasts. EMM producers in face of loss-making are likely to give firm offers, restraining low-priced goods selling in the market. However, output halt and cut at some small and medium EMM producers makes limited impact on overall EMM supply. This, coupled with no improvement in market fundamentals, cannot eradicate low offers.

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