SunSirs: Steel Prices Were Declining Slowly, and Silicomanganese Prices Were Falling Slightly

Price trend

The silicomanganese market saw a period of consolidation last week, with major steel mills entering the bidding market. Inquiry prices were slightly below market expectations. Recent steel bidding prices in South and East China have slowly declined, leading to a wait-and-see attitude in the market. Basis trading dominated transactions, with manufacturers experiencing sluggish shipments and high quotes. This has led to rising costs, but production enthusiasm has not been affected for now. Some mills plan to resume production after maintenance. Data from the SunSirs Commodity Market Analysis System shows that this weekend's market quote for silicomanganese (FeMN68Si18) in Ningxia was around 5,600-5,700 RMB/ton, with an average price of 5,676.00 RMB/ton, a slight decrease of 0.39% from the beginning of the week.

Influencing factors

On the supply side, production at factories in Inner Mongolia saw minimal fluctuations last week, with some factories undergoing maintenance. New high-silicon production capacity is expected this month, and some conventional silicon factories scheduled to start up in October may postpone their operations. Operations in Shanxi and Shaanxi remained low, while those in Ningxia remained stable. Manufacturers are nearing the end of their order delivery cycles, and are primarily adopting a wait-and-see approach to the market.

Yunnan was experiencing its lowest electricity prices, with operating rates remaining around 95%. High operating rates are expected to continue until October. Large factories in Guizhou, which previously started operations, still had room to increase their loads, but due to poor market performance, factories halting production were reluctant to resume operations. One major factory anticipates a gradual resumption of production in mid-to-late September. Factories in Guangxi were shifting to high-manganese and ferrochrome production, leaving fewer silicomanganese manufacturers overall. Electricity prices in Guilin were traded on a spot basis, and most factories report high power consumption, making production uneconomical. They are waiting to see policy outcomes and demand recovery next week.

According to statistics, the operating rate of silicomanganese enterprises nationwide last week was 47.38%, an increase of 0.93% from the previous week; the average daily output was 30,590 tons, an increase of 185 tons.

According to incomplete statistics, as of September 12, the national inventory of silicomanganese enterprises was 166,800 tons, a month-on-month increase of 6,300 tons. Of this total, Inner Mongolia held 41,300 tons, a month-on-month decrease of 1,200 tons; Ningxia held 106,000 tons, a month-on-month increase of 5,000 tons; Guangxi held 6,000 tons, a month-on-month increase of 1,000 tons; Guizhou held 5,000 tons, a month-on-month increase of 500 tons; Shanxi, Gansu, and Shaanxi held 4,000 tons, a month-on-month increase of 500 tons; and Sichuan, Yunnan, and Chongqing held 4,500 tons, a month-on-month increase of 500 tons.

On the upstream cost side: the market quotation of manganese ore in the north is firm, and the difficulty of bargaining has increased. The price of semi-carbonic acid in Tianjin Port was 34-34.5 RMB/ton degree, the price of South African high-speed rail is in the range of 29.5-30 RMB/ton degree, the price of Gabon is around 40 RMB/ton degree, and the price of Australian block index is in the range of 40-41.5 RMB/ton degree.

It is understood that in September and October, Brazilian drift cargo was shipped to Qinzhou Port, with Australian products being the main ones arriving at the port. The overall arrival level remained low, and the short-term manganese ore price was mainly consolidating. We should pay attention to the inventory and downstream production situation in the later period.

On the demand side: A large steel mill in North China launched the September silicomanganese bidding, with a purchase quantity of 17,000 tons, a month-on-month increase of 900 tons. The inquiry price was announced as 5,800 RMB/ton, a decrease of 400 RMB/ton from the purchase price in August.

The price of silicomanganese at a steel plant in Fujian was 5,780 RMB/ton, and the bidding quantity was 13,600 tons, half cash and half tax included, delivered to the factory, with a discount basis; the price of silicomanganese at a certain group was 5,880 RMB/ton in Yunfu, Anhui, 5,860 RMB/ton in Hubei and Jiangsu, and 5,960 RMB/ton in Heyuan, cash including tax delivered to the factory.

Future outlook:

Overall, although steel prices had already set a downward trend, steel mills were still trying to lower prices. However, manganese ore prices were trying to rise, and silicon and manganese companies have very limited room to continue to reduce prices under cost pressure. SunSirs predicts that the silicomanganese market may continue to consolidate and weaken in the short term.

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