Chinese silico-manganese price steadied by balanced fundamentals so far in 2019

The Chinese domestic spot silico-manganese price has been less volatile so far in 2019 thanks to relatively balanced supply and demand fundamentals over the period, market sources told Fastmarkets on the sidelines of an industrial conference in Ulanqab, Inner Mongolia, on Thursday August 29.

Fastmarkets assessed the price of silico-manganese 65% Mn min, max 17% Si, in-whs China at 7,300-7,400 yuan ($1,019-1,033) per tonne on August 23, down by 2.6% from 7,500-7,600 yuan per tonne in early 2019.

This compares with a 5.4% increase over the same period of 2018 when the price rose to 8,700-9,000 yuan per tonne on August 24, 2018, from 8,200-8,500 yuan per tonne in early 2018, Fastmarkets’ price archive showed.

In 2018, the price fell to an annual low of $6,800-7,200 yuan per tonne and rose to a year-high of 8,800-9,000 yuan – a 1,900-yuan price differential. This year so far, the gap between the year-low and -high is just 550 yuan.

New silico-manganese capacity has come online this year, stimulated by handsome profit margins which have widened to as much as around 700 yuan per tonne in July from about 200 yuan per tonne in early 2019, according to market participants. Yet this has been matched with strong demand from the downstream steel sector.

“The highest monthly [silico-manganese] output so far 2019 sits at around 1.05 million tonnes, 105,000 tonnes higher than that in the whole of 2018,” a speaker told delegates during the CNFEOL Manganese conference.

Silico-manganese output in China totaled around 6.4 million tonnes over January-July and production is expected to reach 11 million tonnes by the end of the year. By comparison, total silico-manganese output was 9.4 million tonnes in 2018, the speaker added.

Robust demand from steel mills over the same period has absorbed much of the additional supply, preventing significant downward pressure on the Chinese silico-manganese price.

China produced 577 million tonnes of crude steel in the first seven months of 2019, a rise of 9% from around 530 million tonnes over the corresponding period of 2018, according to data from the country’s National Bureau of Statistics.

“There is indeed some new capacity [of silico-manganese] coming on line this year, but the increase [in new capacity] is not that significant in the first half of the year,” a market participant told Fastmarkets on the sidelines of the conference.

Some price pressure in Q4
Recent downward movement in the Chinese domestic silico-manganese price has been partly due to lower ore prices and bearish sentiment stemming from an expected reduction in demand ahead of the celebrations for the 70th anniversary of the founding of the People’s Republic of China on October 1, when some industry may be curtailed to improve air quality.

Fastmarkets’ manganese ore index 37% Mn, cif Tianjin declined to $5.02 per dry metric tonne unit (dmtu) on August 23, from $5.31 per dmtu and to the lowest level since Fastmarkets began the assessment in February 2018. 

On the same day, Fastmarkets’ manganese ore port index, base 37% Mn, range 35-39%, fot Tianjin China remained at 45.10 yuan per dmtu (equivalent to $5.50 per dmtu, excluding value-added tax and port handling fees), the lowest since June. 

“We admit that the [silico-manganese] price is facing downward pressure at the moment and we could see a 100-200 yuan per-tonne drop in the September tender price from mills,” an alloy smelter told Fastmarkets on the sidelines of the conference.

“But it’s unlikely we will see a significant drop in the price in the near term because some output has already been curtailed recently either because of normal maintenance or due to the environmental inspections,” the alloy smelter added.