China’s common alloys market weakens further due to lower purchase prices

The Chinese common alloys market has continued to be characterized by sluggishness and declining prices over the past week, since the domestic mills have in general lowered their purchase prices for manganese and silicon alloys in general. Due to weak demand from both domestic and foreign customers, most manganese and silicon alloy producers are considering production cutbacks or stoppages again.

In the past week, the prices of manganese alloys have again declined slightly in China's domestic market. Market quotations of FeMn65Si17 are at RMB 8,000-8,100/mt ($1,180-1,195/mt) in the north of China, down RMB 100/mt ($15/mt) week on week and are at RMB 7,700-8,000/mt ($1,136-1,180/mt) in the south, down RMB 50/mt ($7/mt) week on week. At the same time, the mainstream price of FeMn65Si17 stands at RMB 7,700-8,000/mt ($1,136-1,180/mt), down RMB 200/mt ($29/mt) week on week. Meanwhile, export offers of FeMn65Si17 have been standing at $1,470/mt FOB.

China's manganese alloy market has continued to be characterized by sluggishness over the past week. Domestic mills have lowered their purchase prices for manganese alloys. Taking FeMn65Si17 as an example, it is heard that the purchase prices are at RMB 7,950/mt ($1,173/mt) in Hebei, at RMB 8,000/mt ($1,180/mt) in Shandong and at RMB 7,800/mt ($1,150/mt) in the southwestern region. Looking at the current market situation, the lower purchase prices, as well as the increased electricity charges, could cause local manganese alloy producers in general to incur great losses, even though the price of manganese ore has declined slightly. In this context, the producers may choose to cut back or halt their production operations in the coming period.

In the domestic ferrosilicon market, quotations have declined by a small margin. Current ex-works prices of ferrosilicon (75 percent) in the northwestern region stand at RMB 6,600/mt ($973/mt), down RMB 100/mt ($15/mt) week on week while export offers of ferrosilicon (75 percent) are still at $1,360-1,400/mt FOB.

The sluggishness in the overall Chinese steel market has contributed to the price decline in the domestic ferrosilicon market. Due to reduced demand and increased inventories, steel producers, who have been under great cost pressure, are forced to lower their purchase prices for raw materials such as ferrosilicon. It is reported that the mills in eastern China have lowered their purchase price for ferrosilicon by RMB 100/mt ($15/mt). Meanwhile, in line with the weak demand in the international markets, export offers of Chinese ferrosilicon have trended down to slightly below $1,400/mt FOB, but have still been unable to attract the interest of foreign buyers. It is thought that ferrosilicon prices in China may move down further in the near term.