China: Silico Manganese Market Witness Rebounding Demand; Prices Likely to Rise

Silico Manganese prices are poised to go up as logistical issues stirs up the sentiments along with costlier raw material.

The silico manganese market in China continues to run strong this week, although the overall market is not that volatile and the actual demand returns to a moderate level. The latest trade information show that the current mainstream quotation is still around RMB 8,600/MT (USD 1236). In addition, the alloy index shows that on November 9th, the price of silico manganese 65-17 continued to stay stable compared with the previous trading day. Specifically, price in Henan, Hebei, Shandong, Jiangsu etc is RMB 8,765-9,039/MT, delivered, cash including tax.

Currently, cost for producing silico manganese is high due to rising manganese ore and firm coke prices. Comilog announced that the shipment of manganese ore to China in December for Mn 44% lump of Gabon is at USD 7.3/dmtu, up USD 0.1 from last month. Meanwhile, it is heard that from the beginning of the month, the price of electricity for production of silico manganese will increase slightly, along with likely hike in freight rates as a result of difficult transportation condition with the advent of winter. Producers said the supply is in tight situation fueled by the prospect of implementing new rebar standards requiring additional silico manganese as well as the winter storage needs. Under the support of multiple favorable information, the industry's willingness to back price is still strong, and bullish sentiment is all prevalent. However, the recent performance of the Futures market is not good, and the actual demand is more or less moderate.

The fundamentals of silico manganese 60-14 still have no obvious changes, and the price continues to maintain stability. Specifically, manufacturers in producing areas such as Guangxi, Guizhou and Hunan etc. are still in a position to offer at RMB 6,600-6,700/MT (USD 949-963/MT), ex-factory, cash, excluding tax. The actual transaction is mostly around RMB 6,600/MT.

Futures Market

Futures market: silico manganese contract 1901 is dominated by disorderly fluctuations after trading at high position. It is basically struggling around the average price line throughout the day. Opening at 8,596, the highest at 8,626, the lowest at 8,550, closing at 8,582, and settlement at 8,582, an increase of 0.61% (52 points). The positions held are 159,642 lots, and traded volume has a certain degree of decline compared to the previous trading day. Position reductions are 23,930 lots.

Future Outlook

As for the short-term trend, the silico manganese market may continue to operate strongly, but amid the interwoven favorable and negative information, some participants in the industry expressed that the possibility of a sharp increase in Silico Manganese prices is unlikely to happen, but it is almost impossible to fall back either. As for the future outlook, it is necessary to pay close attention to the new production capacity and the change in supply-demand dynamics.