Currently, the released tender price in December is still relatively lower and the downstream industries have slowed down their operations and have resigned to a wait-and-watch mode. Under the backdrop of relatively low price by steel mills as a result of its squeezed profit margins, the alloy plants however are not willing to sell at lower prices due to relatively high costs. Under such circumstances, traders find limited room as most alloy plant are still in the production to meet orders, and spot resources are still relatively tight. In addition, the actual situation of spontaneous maintenance and production limit by 14 silico manganese plants and whether the subsequent tender prices can be adjusted under its influence is still to be seen.
According to our sources in China, the December tender price of Xinyu Iron and Steel for silico manganese was set at RMB 8,900/MT, down by RMB180/MT from the price in November, with purchase quantity of 8,000 MT.
The purchase price of silico manganese by a steel plant in Hebei province was determined to be RMB 8,850/MT, acceptance payment, including tax, lower by RMB 50/MT than the price in November, with the purchase quantity of 3,000 MT.
Fujian Sanming Steel’s purchase price of silico manganese in December is finalized at RMB 8,750/MT (semi-acceptance semi-cash), lower by RMB 200/MT than the price in November, with the purchase quantity of 6,000 MT (half-month demand).
Xiangtan Steel started its tender process today, in which silico manganese demand is 12,000 MT, and the bidding time is until 14:00 on December 6, 2018.
It is reported that Anshan Iron and Steel’s purchase price of silico manganese in December is announced at RMB 7,568/MT (excluding tax).
Although the tender price of steel mills in December is not high, and the purchase is done either by demanding lower price or by not releasing any purchase tender to see the market reaction, the quotation of alloy plants in mid-week has not shown any notable change, with the mainstream price of silico-manganese 65-17 mostly seen at around RMB 8,300-8,400/MT. The alloy index shows that the price of silico manganese 65-17 is stable compared with the previous trading day. Specifically, the price in Henan, Hebei, Shandong, Jiangsu etc is RMB 8,585-8,849 /MT (Delivered, cash including tax).
Futures Market
In the futures market, the silico manganese contract 1901 opened at low position today before fluctuating higher. It was basically supported by the average price line throughout the day. Opening at 8,350, the highest at 8,486, the lowest at 8,330, closing at 8,480,and settlement at 8,408, an increase of 2.14% (178 points). The positions were 140,822 lots, and the trading volume decreased slightly compared with the previous trading day, while position reduced was 12,820 lots.
Manganese Ore
As far as the manganese ore market is concerned, the port manganese ore market in the week continued to be weak. Due to the weak performance in the downstream alloy market, the alloy plants are less interested to purchase raw material, and most of it are tentative inquiries under cautious trading atmosphere. Supported by the high costs, manganese ore traders are unwilling to take the initiative to cut the price, though it is inevitable that the actual price will be slightly lower in a bid to seek more transaction under weak market atmosphere. According to feedback, the current price of Australia lump 46% at Tianjin port is offered at RMB 63-64/dmtu , semi-carbonated ore at RMB 56-57/dmtu, Gabonese ore 44% at RMB 60-61/dmtu; and Qinzhou port is under burden of massive inventory.
Future Outlook
In general, the current release of tender prices of the iconic steel mills has eased the market’s weak sentiment slightly. Meanwhile, as there is still no large amount of spot material available for sale in the current market, there is limited downside for the silico manganese price under the support of cost. However, the progress of steel tenders is slow and sluggish, likely affected by the continued downward trend of steel prices. If the buying power is insufficient in the latter period, some small alloy plants might reduce price under pressure of tightening capital chain at the end of the year. The specific trend is largely hinged on changes in supply and demand and plant operating rates.
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