SunSirs: Cost Support and High Supply, Silicomanganese Market Was Consolidating

Price trend

After the National Day holiday, the silicomanganese market experienced volatile performance, with futures prices fluctuating. A wait-and-see attitude prevailed, resulting in relatively light trading volume. Factory quotations were subdued, with most continuing to maintain pre-holiday prices. Data from the SunSirs Commodity Market Analysis System showed that last weekend, the market price for silicomanganese (FeMN68Si18) in Ningxia was around 5,550-5,700 RMB/ton, with an average price of 5,646.00 RMB/ton, down 0.28% from pre-holiday levels.

Influencing factors

Supply side:

Last week, production at Inner Mongolia factories saw minimal fluctuations. Some plants were undergoing ongoing maintenance, and new production capacity had not yet been commissioned. However, there were expectations of hundreds of thousands of tons of new capacity coming online in the late month, so a wait-and-see approach was recommended. Production at Ningxia factories maintained pre-holiday performance, with some undergoing minor, short-term maintenance.

In the southern region, a large factory in Guizhou was operating at full capacity, with a significant increase in load, driving an increase in Guizhou's overall output. However, other manufacturers were temporarily in an inverted state, and their production enthusiasm continued to decline. Yunnan was entering the normal water period and will enter the dry season next month. Some factories will gradually reduce or stop production. Due to the electricity fee trading model in Guangxi recently, the production of silicomanganese did not have an advantage. Factories had gradually switched to the production of high manganese. As of October 11, there were few silicomanganese production factories in Guangxi.

According to statistics, the operating rate of Silicomanganese enterprises across the country last week was 43.19%, a decrease of 0.99% from the previous week; the average daily output was 29,175 tons, a decrease of 315 tons.

As of October 9, according to incomplete statistics, the national inventory of silicomanganese enterprises was 242,500 tons, a month-on-month increase of 7,700 tons. Among them, the inventory in Inner Mongolia was 41,500 tons, a month-on-month decrease of 800 tons; in Ningxia, it was 173,000 tons, a month-on-month increase of 4,000 tons; in Guangxi, it was 9,000 tons, a month-on-month increase of 1,000 tons; in Guizhou, it was 5,500 tons, a month-on-month increase of 500 tons; in Shanxi, Gansu, and Shaanxi, it was 6,500 tons, a month-on-month increase of 2,000 tons; and in Sichuan, Yunnan, and Chongqing, it was 7,000 tons, a month-on-month increase of 1,000 tons.

Upstream Costs:

The manganese ore market adopted a wait-and-see approach after the holiday, with prices fluctuating and weak. Manganese ore transaction prices fluctuated only slightly compared to pre-holiday levels, remaining relatively stable overall. Australian prices had shown slight easing, with a slight downward trend in sight. Manganese ore spot prices at Qinzhou Port had seen mixed performance, with South African manganese ore experiencing a tentative price increase due to a tightening supply of dwindling supply. Semi-carbonate and South African iron prices had both increased by approximately 0.5 RMB/ton.

As of October 11, the price of semi-carbonated crude oil at Tianjin Port was around 34 RMB/tonne/unit, while South African high-speed rail was around 30 RMB/tonne/unit and Gabon was around 40 RMB/tonne/unit. The price of Australian block crude oil was in the range of 39.5-41 RMB/tonne/unit, with downstream market fluctuations to be monitored. The price of semi-carbonated crude oil at Qinzhou Port was 37-37.5 RMB/tonne/unit, Australian seed oil was 35-36 RMB/tonne/unit, Australian block crude oil was 39-41 RMB/tonne/unit, and South African high-speed rail oil was 30.5 RMB/tonne/unit.

Demand side:

A certain group had launched a new round of silicomanganese bidding, with the price for delivery to Hubei being 5,790 RMB/ton for a quantity of 400 tons; the price for delivery to Jiangsu being 5,760 RMB/ton for a quantity of 500 tons; and the price for delivery to Heyuan being 5,860 RMB/ton for a quantity of 800 tons. These prices were a decrease of 70-120 RMB/ton compared with the previous round of purchases. All the above prices were cash prices including tax.

Steel mills' profits continued to be compressed, and there was a clear sentiment to lower the prices of raw materials. Most manufacturers were still watching the market and the price performance of steel products. It is expected that the market will maintain a consolidation in the short term.

Market outlook

On the whole, on the one hand, there was cost support, the price of manganese ore was consolidating, the price of chemical coke had increased by 50 RMB/ton, and the overall alloy cost support was still acceptable; on the other hand, silicomanganese was also facing the pressure of continued increase in supply; at the same time, the profits of steel mills continued to be in a compression stage, and the sentiment of price reduction for raw materials was obvious. SunSirs expects that the silicomanganese market may maintain consolidation in the short term.

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