China: Silico manganese market exhibits stagnation amidst downturn signals

Stagnancy in silico manganese prices reflected consistent market conditions amidst lingering sluggishness in China last week. Prices were firm to around RMB 5,900/t - 6,100/t ($815/t-$843/t). All prices were ex-works and inclusive of taxes.

The factors that drove the price stability in China were:

Negotiations and market demand remain subdued: Recent negotiations in the silico manganese market revealed a persistence of weak sentiment. This lack of robust buying activity is compounded by tepid overall market demand. Furthermore, the situation is further challenged by a rise in production stoppages within the Ningxia region due to environmental regulations. This confluence of factors has led to a prevailing sluggishness across the market.

Mn ore price recovery buoys silico manganese market: The recent uptick in manganese ore prices is injecting a dose of optimism into the silico manganese market. This cost-side support for silico manganese production could lead to more stable pricing in the near term.

With these developments, coupled with external market support, there's a possibility that ore prices may rebound. This scenario could further bolster the silicon manganese market and contribute to its anticipated recovery.

Downstream uncertainty and cautious sentiment: Subdued performance in the futures market, a key indicator of downstream demand for silico manganese, has fostered cautious operating sentiment among industry participants. This translates into average alloy transaction volumes in the current period. However, a glimmer of optimism exists, as some industry players anticipate a potential rise in demand later in the year when steel production is expected to pick up.

ZCE prices remain range bound: Silico manganese futures for last week's deliveries on China's Zhengzhou Commodity Exchange (ZCE) were also consistent with a slight increase by RMB 200/t ($28/t) w-o-w at RMB 6,374/t ($881/t) on 15 April, 2024 which could also be the reason for the domestic market price consistency.

Outlook

Given these prevailing conditions, the silico manganese prices is likely to remain firm in near-term. However, continuous monitoring of key metrics, including downstream steel production trends, cost structures, and evolving demand dynamics, will be crucial for accurately assessing the future price trajectory.

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