WEEKLY: China's SiMn prices slump to 31-month low

China's silicomanganese prices slumped over the past week as the market mood remained sombre, with the price for 6517 grade SiMn in North China down Yuan 575/tonne ($82/t) week on week to hit a 31-month low of Yuan 6,150/t EXW and including the 13% VAT as of November 1, Mysteel's data showed.

The substantial drop in price was mainly blamed on the deteriorated sentiment in the domestic SiMn market, with the lower-than-expected bidding prices from steel mills and the escalating panic in the manganese ore market, Mysteel Global notes.

Major steel mills in North China were in no hurry to purchase SiMn given their relatively high stocks at hand last week. At the same time, the coming production curbs that government authorities are seen imposing to control smog during winter may affect the mills' normal operations and reduce their consumption of this ferroalloy, Mysteel Global learned.

"A steel producer in East China lodged its bid for November deliveries last week, but the bidding price was more than Yuan 1,000/t lower than that for October," according to a Shanghai-based market insider, saying this had further aggravated the bearish sentiment in the domestic SiMn market.

China's manganese ore price decreased sharply last week due to the persistent drop in offering prices of overseas miners exporting to China - a development which added to the panic among domestic Mn ore suppliers, Mysteel Global notes.

As of November 1, Mysteel's price index of South Africa-origin 36.5% grade manganese ore at North China's Tianjin port had slipped to Yuan 33.92/dmtu, a 31-month low. The price was down Yuan 2.38/dmtu from one week before or lower by a much larger 19.2% on month.

Given the depressed market, South32, the world's top manganese ore miner headquartered in Perth, Western Australia, cut its offering price for November supplies to China again last week, with its Australia-origin 45.5% grade manganese ore lump down another $0.68/dmtu compared with its first offering price for November (tabled late last month) to $3.9/dmtu CIF China, Mysteel's survey showed.

"More than 80%of the domestic SiMn smelters have been operating at a loss, and they are likely to reduce their output in November," the Shanghai-based market watcher said. "This may put more pressure on the domestic manganese ore market as the demand from smelters is expected to decrease if they (domestic SiMn smelters) cut production as planned," the market watcher warned.