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Global oversupply will keep SiMn prices low in 2012, analyst - 16 February 2012

The global silico-manganese (SiMn) market is set to remain over supplied in 2012, despite record levels of consumption. This will keep prices low, according to Denny Sabah, an analyst at London-based trading firm Ronly.

SiMn output was scaled back in late 2011 and global stock levels have finally receded to low levels, but this should have been done earlier, Sabah told the Metal Pages Ferro-Alloys Global Markets conference in Dubai yesterday (15 February) attended by Steel Business Briefing. “When demand picks up, production will too at an equal rate. A large number of SiMn producers claim to be operating at a loss, so if they get an order they will fulfil it,” the analyst added.

Since 2006, Indian SiMn production has soared by 91%. The nation has aggressively pushed sales of SiMn to Asian countries such as Japan, Taiwan and South Korea, which lost China as their main supplier following the Chinese imposition of a 40% export duty in 2009.

China is now a net importer. It consumes all of its SiMn output and is restricting construction of new smelters. Sabah indicated that if Chinese crude steel output were to grow 7% in 2012, based on a usage of 7.5kg of SiMn per tonne of crude steel, an extra 360,000 tonnes of SiMn will be needed. Most of this will be imported.

The average SiMn price today is 18% lower than two years ago, Sabah observed. European spot SiMn is pegged at $1,100/t, while Chinese domestic SiMn stands at $1,300/t.


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