Price trend

Last week, the weak performance of silicomanganese futures negatively impacted market sentiment.  With the approaching Chinese New Year holiday in February, expectations for pre-holiday silicomanganese demand were likely to decrease, leading to increased price negotiation in the silicomanganese market. According to data from the SunSirs commodity price analysis system, the market price of silicomanganese in Ningxia (specification: FeMN68Si18) was around 5,500-5,550 RMB/ton last weekend, with an average market price of 5,534.00 RMB/ton, a decrease of 0.82% compared to the previous week.

Influencing factors

Supply side: Last week, some furnaces in Inner Mongolia were expected to cease production at the end of the month, but newly added capacity continued to produce iron, and some factories still had expectations of starting up before the Lunar New Year. Production fluctuations were minimal, and factories mainly focused on fulfilling previous orders. Production in Ningxia remained relatively stable, with some factories undergoing maintenance. Previous shipments were low, and factory inventories remained high.

Southern factories were still operating at low capacity, and there haded been no significant decrease in electricity prices. Manganese ore prices remain firm, leading to severe cost inversions for factories.  There was temporarily no progress on resuming production. The electricity price situation in the Guangxi region was still unclear, and factories were waiting for the February electricity price settlement before deciding on their future production plans.

According to statistics, the operating rate of silicomanganese-manganese enterprises nationwide last week was 36.21%, an increase of 0.15% compared to the previous week; the average daily output was 27,305 tons, an increase of 80 tons.

According to incomplete statistics, as of January 23, the total inventory of silicomanganese alloy enterprises nationwide was 373,000 tons, a 200-ton increase compared to the previous period. Of this, Inner Mongolia accounted for 60,000 tons (a decrease of 2,000 tons), Ningxia 296,000 tons (an increase of 3,000 tons), Guangxi 3,000 tons (a decrease of 1,000 tons), Guizhou 2,000 tons (a decrease of 1,000 tons), Shanxi, Gansu, and Shaanxi combined 10,000 tons (an increase of 1,700 tons), and Sichuan, Yunnan, and Chongqing combined 2,000 tons (a decrease of 500 tons).

Upstream cost side: Last week, the northern manganese ore market fluctuated, and the downstream silicomanganese futures market declined. Factories showed strong price-cutting sentiment during inquiries, and some futures and spot traders lowered their manganese ore quotations. The focus of spot manganese ore transactions shifted downwards, with an overall correction of approximately 0.3 RMB/ton. In terms of different ore types, granular manganese ore showed strong price performance due to tight supply, while other types performed generally, maintaining a range-bound fluctuation. Manganese ore inventory at Qinzhou Port remained at a high level of over one million tons. Spot prices showed mixed trends. Influenced by high forward costs, manganese ore quotations rose, and transactions followed suit at the beginning of the week. However, due to the weakening futures market and low demand, price increases were limited, and transaction prices were inconsistent in the middle of the week.

Data shows that as of January 23, the transaction prices for manganese ore at Tianjin Port were as follows: semi-carbonate grade at 35.8-36.3 RMB/MTU, South African high-grade ore at 30.5-33 RMB/MTU, Gabon ore at 42.7-42.8 RMB/MTU, South32 Australian lumps at 41.5-41.7 RMB/MTU, and CML Australian lumps at 43-43.5 RMB/MTU. At Qinzhou Port, high-grade Australian fines were priced at 37-37.5 RMB/MTU, semi-carbonate at 35-35.5 RMB/MTU, and Australian lumps at 42-42.5 RMB/MTU.

Demand side: Due to the influence of the Spring Festival holiday, downstream companies had a need for pre-holiday inventory stocking, and steel procurement remained relatively active. It is reported that a steel plant in Shandong had finalized its latest silicomanganese bidding price at 5,720 RMB/ton (cash payment), for a quantity of 2,000 tons. A steel plant in Anhui had finalized its latest silicomanganese alloy bidding price at 5,845 RMB/ton (acceptance payment), a decrease of 85 RMB/ton compared to the previous period. A steel plant in East China had finalized its latest silicomanganese bidding price at 5,800 RMB/ton (acceptance payment), a decrease of 60 RMB/ton compared to the previous round. Another steel plant in East China had finalized its latest silicomanganese alloy bidding price at 5,830 RMB/ton (acceptance payment). In addition, Xinyu Iron & Steel plans to bid for 4,000 tons of silicomanganese alloy, with the bidding deadline at 14:20 on January 27th.

Market outlook

Overall, production in northern China gradually resumed, and there was no significant decrease in operating rates recently. The overall supply level remained relatively high; cost-driven factors were weakening, and with the decrease in trading activity, pressure on manganese ore prices was increasing. Sunsirs expects the silicomanganese market to continue fluctuating in the short term.

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