Chinese silico manganese prices surge amid costlier raw materials

The escalation in trade activities with a parallel upswing in demand caused Chinese silico manganese prices to move up. Spot prices of silico manganese (60-14) surged by RMB 200/t ($28/t), hovering within RMB 6,900/t-7,100/t ($956/t-$984/t) ex-works and inclusive of taxes. It was noticed that there was a complex interplay of factors affecting the silico manganese market in China:

Boost in trade activities: The rise in trading activity coupled with increased prices of both manganese ore and coke suggested a tightening of supply or increased demand, or both. Manufacturers responded to the increased costs by raising prices, which led to actual transactions occurring.

However, traders were cautious, preferring to wait and see how the market develops before committing to significant transactions. Their reluctance suggested that while there's optimism about the current situation, there's also a degree of uncertainty about future developments.

Increase in raw material prices: The manganese ore market moved upwards that directly impacted the cost structure for silico manganese. The restoration of the railway track between the Gabon ports of Ovindo and Franceville is also noteworthy, as it implies improved logistics and potentially increased efficiency in ore transportation.

The window period for arrivals in Gabon suggests that there might be a limited time frame for shipments to arrive, which could potentially create some urgency in the market. Combined with declining port inventory and external market support, this situation may indeed lead to a rebound in ore prices.

China's met coke producers have accepted the fourth round of price hike on 1 May, 2024. Met coke prices in Hebei's Tangshan were assessed at RMB 2,060/t ($285/t), an increase of RMB 100/t ($14/t) d-o-d.

Positive shift of futures: The recovery of the futures market indicated a positive shift in sentiment among industry players, suggesting increased confidence in future demand for steel and its related products. This improved sentiment is likely fuelled by ongoing steel production and the anticipation of an increased demand in the later period.

Monitoring changes in the supply and demand relationship of silicon manganese will be crucial in assessing the market's trajectory in the short term.

Outlook:

The cautious wait-and-see attitude prevailing in the market suggests a degree of uncertainty among both buyers and sellers. While there are positive signs, there are still reservations, particularly regarding downstream acceptance.

The anticipation underscores that the market will ultimately move towards a more positive trajectory. However, continued monitoring and adaptability remain essential as the situation evolves.

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