Chinese common alloys market retains its soft trend

The Chinese common alloys market continued to be characterized by softness throughout the past week. Since quotations of Australian manganese ore have remained stable for August and September, no big change has been seen in the prices of imported manganese ore and manganese alloys in the domestic market. Meanwhile, the domestic ferrosilicon market was still sluggish overall in the past week, with a recovery appearing unlikely in the short term.

As regards manganese alloys, prices of silicon manganese showed a general stability in the past week, with the high carbon ferromanganese market becoming gradually stable. At present, market quotations of silicon manganese FeMn65Si17 are still in the range of RMB 6,300-6,600/mt ($922-966/mt); meanwhile, mainstream prices of high carbon ferromanganese FeMn65 have remained constant at RMB 6,000-6,300/mt ($878-922/mt).

Prices of manganese ore at the Chinese ports have maintained a general stability over the past week, with some traders no longer giving out quotations on account of the tight supply of spot materials. Currently, market quotations of Australian manganese ore (44 percent Mn) are still at RMB 38/mtu ($6/mtu) at Tianjin port. Meanwhile, it is heard that Australian suppliers have announced unchanged quotations for August and September manganese ore compared to July levels, with the 48 percent high grade manganese lump ore offered at $3.8/mtu and 44 percent lump at $3.5/mtu. Looking at the current situation, it appears quite difficult for imported manganese ore prices to see any big rally in the domestic market in the coming period.

Generally speaking, the overall manganese alloys market in China has been fluctuating at bottom levels in recent days, with the prices of silicon manganese and high carbon ferromanganese hovering around the cost line. Thus, the market seems unlikely to go down further. Considering the growing demand for silicon manganese, plus the climbing costs of manganese ore, quotations of silicon manganese are expected to see a slight rise while prices in the high carbon ferromanganese market are likely to remain at low levels.

With regard to ferrosilicon, with this market still characterized by sluggishness, domestic quotations of ferrosilicon recorded a minor reduction over the past week. The ex-factory prices of ferrosilicon (75 percent) in the northwestern regions have declined by RMB 50/mt ($7/mt) to the range of RMB 5,150-5,200/mt ($754-761/mt), while domestic ferrosilicon is still offered at around $1,050-1,100/mt FOB for the export market.

Following the upward adjustment made by the customs authorities to the export price limit, China's ferrosilicon export market faces a gloomy future. Given the relatively high export tariff on ferrosilicon products, China's ferrosilicon has no advantage at all in the export market. Looking at the current situation, given the insufficient levels of domestic demand, most ferrosilicon producers have no choice but to maintain their production at low capacity utilization rates. In Inner Mongolia, some producers have even switched to production of other products on account of the high electricity charges in this region. Overall, the Chinese ferrosilicon market is unlikely to emerge from its current weak situation in the short term.