China: High costs, cautious demand drive down silico manganese prices

The tax-inclusive spot prices of silico manganese in China fell w-o-w by RMB 200/t ($28/t) to RMB 8,000-8,300/t ($1,103-1,144/t) this week amid market uncertainties.

Factors that impacted market this week

Limited trade in downstream sector: The market experienced a downward trend in silico manganese prices w-o-w. The rise in smelting costs and cautious procurements by the downstream sector cast doubts on production resumption. Additionally, a declined futures market led to a cautious buying in the spot market too.

High raw materials prices: The manganese ore market remained robust with sustained high prices due to minimal disruptions in the supply side.

Moreover, the restored railway line between Gabonese ports of Owendo and Franceville promised improved logistics efficiency, potentially reducing port inventories.

Simultaneously, disruptions in Australian ore shipments bolstered overseas market support, likely leading to further price increases. As such, Gabon remains poised to benefit from a favourable window for port arrivals, with expectations of declining port inventories in the foreseeable future.

Steel demand dampens, margin get squeezed: Steel demand has waned in the off-season, pressuring steel mills' profits and limiting finished product output growth. This could weaken support for silico prices.

Despite this, the industry anticipates demand growth with market adjustments, fostering supplier optimism. Short-term focus remains on low-price transactions and evolving silico and manganese supply-demand dynamics.

ZCE silico manganese prices dip w-o-w: Silico manganese prices on China's Zhengzhou Commodity Exchange (ZCE) for September 2024 delivery declined by RMB 900/t ($124/t) to RMB 7,622/t ($1,051/t) on 14 June against RMB 8,522/t ($1,175/t) seen on 7 June.

Outlook

The market remains cautious, with both buyers and sellers adopting a wait-and-see approach. It is anticipated that the silico manganese market would remain stable in the near term.

Note: This article has been written in accordance with an agreement between CBC and BigMint.