Mysteel Global: The continuing mismatch between supply and demand will keep China’s silico manganese (SiMn) prices weak this month, though production may decline further should the margin losses being endured by domestic SiMn smelters deepen, according to Mysteel’s latest monthly survey.
As of May 7, the national price of 6517 SiMn under Mysteel’s assessment was at Yuan 5,529/tonne ($764/t) including the 13% VAT, sliding by Yuan 274/t from one month before.
As for the derivative market, the most-traded SiMn contract on the Zhengzhou Futures Exchange for delivery in September closed the daytime trading session on May 7 at Yuan 5,598/t, slumping by Yuan 482/t from the contract’s settlement price on the same day in April, according to the exchange’s data.
After noting the substantial decline in SiMn futures prices, many steel producers had cut their April-delivery bidding prices for the ferroalloy, which aggravated the negative sentiment in the domestic SiMn market and placed more pressure on spot prices, Mysteel Global noted.
For example, the SiMn bidding price for April delivery tabled by Hebei Iron and Steel Group (HBIS), a major steel producer in North China’s Hebei province, was finally confirmed at Yuan 5,950/t, sliding by Yuan 450/t from March, as reported.
Domestic smelters suffered more losses on SiMn sales with the persistent weakness in prices last month, a condition which led more smelters to conduct maintenance on their smelting facilities
During April, total SiMn production among the 187 Chinese SiMn smelters under Mysteel’s regular tracking registered 805,895 tonnes, falling by of 93,220 tonnes or 10.4% from March. On a daily basis, SiMn output among the sampled smelters averaged 26,863 tonnes/day in April, lower by 2,140 t/d or 7.4% compared with the March daily average, the survey results showed. The sampled smelters host 99% of China’s SiMn smelting capacity.
Among the country’s five major production bases, SiMn output in Southwest China’s Guangxi posted the sharpest on-month fall in April, while the production in Northwest China’s Ningxia also declined significantly, the results showed.
Despite the on-month decline, China’s overall SiMn supply still stayed at a relatively high level. During the first four months of this year, China’s production of the ferroalloy among the 187 sampled smelters nationwide monitored by Mysteel totalled 3.4 million tonnes, higher by 2.5% from the same period last year.
China’s SiMn output is likely to slip further this month with the poor performance of SiMn prices in both the physical and futures markets. Domestic smelters may continue to operate at a loss as they must smelt using high-priced manganese ore they had purchased earlier. Meanwhile, the pressure on SiMn sales may also dampen their enthusiasm for production, an industry watcher in Shanghai said.
Spot manganese ore prices in China have also lost ground with the weakening SiMn prices and the increased volume of ore delivered to China’s major ports. Mysteel’s assessment showed that as of May 7, the price of South Africa-origin 36.5% grade manganese ore at North China’s Tianjin port was at Yuan 32.8/dmtu including the 13% VAT, lower by Yuan 2.7/dmtu on month.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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