SunSirs: Strong Costs and Weak Demand Led to a Weak Performance in the Silicomanganese Market Last Week

Price trend

Last week, the silicomanganese market fluctuated. On the one hand, cost support was relatively strong, with some silicomanganese enterprises in producing areas reducing furnace operating rates or undergoing maintenance and production conversion, keeping prices relatively stable at the bottom. On the other hand, the downstream steel market was sluggish, and customers were unlikely to change their mentality of pushing for lower prices when purchasing raw materials. According to data from the SunSirs commodity market analysis system, at the end of last week, the market price of silicomanganese (specification FeMN68Si18) in Ningxia was around 5,450-5,550 RMB/ton, with an average market price of 5,524.00 RMB/ton, a slight decrease of 0.83% compared to the beginning of the week.

Influencing factors

Supply side:

Last week, the operating rate of factories in Inner Mongolia fluctuated slightly. Output of some furnaces that had switched to producing other products decreased. There were still two furnaces expected to switch to producing other products. The electricity settlement price for some factories last month was reduced by approximately 0.02-0.03 RMB/kWh. Overall production in Ningxia remained stable, and manufacturers' shipment schedules were normal.

Production in southern regions decreased slightly. A factory in Xingyi, Guizhou, had suspended production for maintenance due to a furnace problem. The resumption time was temporarily undetermined, affecting daily output by about 200 tons. In Guilin, Guangxi, most factories used spot trading for electricity. During off-peak hours, the electricity cost for one shift was around 30 cents, and production enthusiasm was still acceptable.

According to statistics, the operating rate of silicomanganese enterprises nationwide was 39.59% last week, a decrease of 0.65% compared to the previous week; the average daily output was 28,510 tons, a decrease of 330 tons.

As of November 14, according to incomplete statistics, the national inventory of silicomanganese enterprises was 349,500 tons, an increase of 30,000 tons compared to the previous period. Among them, Inner Mongolia had 50,500 tons, an increase of 6,000 tons; Ningxia had 263,000 tons, an increase of 21,000 tons; Guangxi had 12,000 tons, an increase of 500 tons; Guizhou had 8,000 tons, an increase of 1,000 tons; (Shanxi, Gansu, and Shaanxi) had 6,000 tons, an increase of 1,000 tons; and (Sichuan, Yunnan, and Chongqing) had 10,000 tons, an increase of 500 tons.

Upstream Costs:

Last week, the manganese ore market maintained a firm upward trend. Inquiries in the oxide ore market increased, and with the concentration of port ownership, traders became more reluctant to sell, leading to price increases. Overall, oxide ore prices rose by 0.5 RMB/MTU or more. The mainstream price for semi-carbonated ore at Tianjin Port was 34.5 RMB/MTU, South African high-speed rail ore was 29.5-30 RMB/MTU, Gabonese ore was 40.5 RMB/MTU, and Australian lump ore was priced between 39.5-41 RMB/MTU, with transactions somewhat stagnant. At Qinzhou Port, South African semi-carbonated ore was priced at 37 RMB/MTU, and South African high-speed rail ore at 31 RMB/MTU. Oxide ore spot prices rose due to increased international prices in Comilao and rising costs upon arrival at ports. Australian and Gabonese lump ore prices remained relatively stable, while Australian seed ore, previously lower, was temporarily priced at 35.5-36.5 RMB/MTU.

On the international market, NMT announced a December offer of $4.1/MTU for semi-carbonated bicarbonate, with supply remaining low and market demand remaining strong. Jupiter announced a December offer of $4.1/MTU for Mn 36.5% South African semi-carbonated bicarbonate.

On the demand side:

HBIS Group's final November price for silicomanganese was 5,820 RMB/ton, with the first round of inquiries at 5,750 RMB/ton. The October price for silicomanganese was also 5,820 RMB/ton. (The November 2024 price was 6,280 RMB/ton). HBIS Group's November silicomanganese procurement volume was 16,000 tons. October procurement volume: 16,500 tons. (November 2024 silicomanganese procurement volume: 12,300 tons).

A steel mill in southern China had finalized its latest tender price for silicon-manganese alloy at RMB 5,780-5,890/ton (acceptance payment), with a total purchase quantity of 4,300 tons. A steel mill in Guangdong had finalized its latest tender price for silicon-manganese alloy at RMB 5,750/ton (acceptance payment, subject to basis discount), with a purchase quantity of 3,000 tons. A steel mill in Sichuan has finalized its latest tender price for silicon-manganese alloy at RMB 5750/ton (cash payment), with a purchase quantity of 1,400 tons. A steel mill in East China has finalized its latest tender price for silicon-manganese alloy at 5,798 RMB/ton (acceptance payment), with a purchase quantity of 3,000 tons.

It is reported that Maanshan Iron & Steel planned to purchase 3,000 tons of silicon-manganese alloy in its new round of bidding; Shougang Shuicheng Iron & Steel planned to bid for 3,000 tons of silicon-manganese alloy; Lingyuan Iron & Steel planned to bid for 3,000 tons of silicon-manganese alloy; Zhongnan Steel planned to bid for 1,000 tons of silicon-manganese alloy, etc.; the progress of steel bidding was still under observation.

Market outlook

Overall, costs remained firm, with varying electricity price adjustments in different production areas. However, manganese ore prices at ports in both the north and south were generally stable, and coking coal prices rose. Aside from progress in steel procurement, retail sales of silicomanganese were relatively weak. Furthermore, some production areas failed to implement the large-scale proactive production cuts expected by the market, resulting in a lack of overall market confidence. SunSirs predicts that with continued upstream and downstream competition, silicomanganese prices may not fluctuate significantly in the short term. Attention should still be paid to macroeconomic expectations and changes in factory operating rates in production areas.

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