China's silico manganese prices to stay under pressure in H2CY'24

Mysteel: After the wide fluctuations seen during the first half of this year, silico manganese prices in China are expected to stay under pressure during this half of the year given the imbalance between supply and demand, Mysteel predicts in its latest forecast for the domestic silico manganese market.

"The surplus may continue in the near term due to the domestic silico manganese smelters' high rates of production," a market watcher in Shanghai said, adding that Chinese silico manganese prices are likely to move down in the months ahead under pressure from the supply side.

Over the first six months of this year, total silico manganese output among the 187 Chinese smelters under Mysteel's regular tracking reached 5.05 million tonnes, down by 454,029 tonnes or 8.3% from the same period last year. The sampled smelters host 99% of China's silico manganese smelting capacity.

However, the sampled smelters' silico manganese output increased rapidly last month, with their daily production of the ferroalloy averaging 31,004 tonnes/day in June, surging by 4,999 t/d or 19.2% from the previous month, as reported.

For the time being, smelters in northern China and Southwest China's Yunnan continue to keep their production high given their relatively low smelting costs with their access to competitive prices, though their profit margins shrank fast with the steady fall in silico manganese prices, Mysteel Global noted.

As of July 16, the national price of 6517 silico manganese was assessed by Mysteel at a 2.5-month low of Yuan 6,862/tonne ($945/t) including the 13% VAT, slumping by Yuan 1,811/t compared with the recent high on May 30.

As for silico manganese demand, the report says steelmakers are unlikely to ramp up production in the third quarter of this year as steel demand from end-users may weaken further. Their consumption of all ferroalloys including silico manganese may not see any significant improvement for the foreseeable future, it warned.

Many Chinese steel producers are aiming to keep their inventories of the ferroalloy in check this year, and their bidding volumes have also seen a substantial fall, Mysteel Global learned.

For example, the silico manganese bidding volume for delivery over January-July tabled by Hebei Iron and Steel Group, a major steel producer in North China's Hebei province, totalled 88,130 tonnes, falling by 41,430 tonnes or 32% on year, according to Mysteel's survey.

On the other hand, China's silico manganese prices may gain some support from the cost side, as domestic manganese ore prices are likely to keep firm thanks to the support of higher offering prices of major overseas mines, according to the report,

Earlier this month Eramet Comilog, a major manganese ore exporter from Central Africa's Gabon, announced that its prices for 44.5% manganese content manganese lump ore for shipments to China in August would increase by another $0.7/dmtu on month to $9/dmtu CIF China, as reported.

Meanwhile, inventories of manganese ore at China's major ports may decline further with the reduction in volumes sailing to China. For example, shipments from South32's Australia Manganese joint venture are yet to resume after the damage to Groote Eylandt port facilities caused by Tropical Cyclone Megan in mid-March.

Mysteel's weekly survey showed that total manganese ore inventories at China's major ports hovered at a relatively low level over the past two months, with the tonnage reaching 4.68 million tonnes as of July 12. This was lower by 14.7% from the end of last December, though it had recovered somewhat compared with the four-year low of 4.53 million tonnes in late June.

Currently, Chinese manganese ore prices are being impacted by the weakness of the silico manganese market, with the price of South Africa-origin 36.5% grade manganese ore at North China's Tianjin port under Mysteel's assessment slipping to Yuan 41/dmtu including the 13% VAT as of July 16, much lower than the recent high of Yuan 55/dmtu on May 29 and higher by Yuan 10.5/dmtu compared with the end of last December.

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