Chinese silico manganese prices increase w-o-w on raw material cost push

China's silico manganese prices were up by RMB 550/tonne ($76/t) this week as trade activities continued to move up and raw material prices also followed an upward trend.

Spot prices of silico manganese (60-14) surged by RMB 550/t ($76/t) to hover at a range of RMB 7,450/t-7,650/t ($1,030-1,057/t) ex-works and inclusive of taxes.

Factors driving up China's silico manganese prices

Rise in trade activities: Increased trade activities were a pointer that buyers were interested. But, increased manganese ore and coke prices continued to keep production costs of smelters high.

Thus, smelters were still keen to keep prices on the higher side, leading to an increase in silico manganese quotations and the buoyant buying activity kept transactions high too.

Higher raw material costs support prices: The uptrend in prices of raw materials like manganese ore and coke is supporting silico manganese prices and production.

Restoration of railway tracks: Restoration of the railway track between Gabon ports like Ovindo and Franceville was a positive development, as it ensured smoother transportation of manganese ore. However, there seems to be expectation of a window period for arrivals in Gabon later, which could impact port inventory levels.

Furthermore, the possibility of Australian ore shipments being blocked could have significant implications for the market. If this occurs and is supported by external market forces, it could lead to a rebound in ore prices.

ZCE silico manganese prices move up: China's Zhengzhou Commodity Exchange (ZCE) for May 2024 delivery contract saw a w-o-w increase of RMB 1,162/t ($161/t) to RMB 9,112/t ($1,260/t) on 13 May which was RMB 7,950/t ($1,099/t) on 6 May.

Boost in futures market: The futures market continued to rise, indicating positive sentiment and expectations of increased demand within the industry. Additionally, there are suggestions of further potential for demand growth with marginally higher steel demand, leading suppliers to be optimistic about the market outlook.

However, the slow progress of northern steel mills tempered some of this optimism, leading to a wait-and-see attitude in the silico manganese market.

Outlook

The increase in the cost of production is supporting silico manganese prices.

Looking ahead, there is an expectation that as the steel market continues to recover, silico manganese, demand too will rebound in the near term.

Keeping an eye on future updates and how they influence market sentiments will be important for understanding the trajectory of the silico manganese market in China.

Note: This article has been written in accordance with an agreement between CBC and BigMint.