Over twenty Chinese ferromanganese producers, representing more than two-thirds of the country's production gathered in Shanghai on February 25th to hold an industry conference.
There was pessimism regarding the global economy and a feeling that the world's major economies will not recover quickly from the financial crisis.
The Chinese producers face two difficulties: on the one hand, producers bought large amounts of manganese ore at a high price and stock levels of the ore are still high; on the other hand, even thought the manganese ore price has fallen, producers have yet to enjoy the low price and production costs have remain higher than sales prices.
Meanwhile steelmakers are squeezing purchasing costs and are delaying payments, triggering huge losses for ferromanganese producers.
Alloy stocks have dived after months of consumption. Only less than 50% of producers have maintained their production.
In the face of these conditions, producers should strengthen cooperation, struggle for preferential prices for manganese ore, ask the National Development and Reform Commission for relaxed policies through the ferroalloy association and strive for preferential electricity prices in local regions.
Producers agreed at the conference to control ferroalloy output, prevent 'blind' production, maintain moderate sales prices and enhance communication with steelmakers in order to win a mutual understanding.
Production costs now stands at over CNY 8,000 per tonne for silicomanganese, CNY 8,000 per tonne for 65 high carbon ferromanganese and CNY 10,500 per tonne for 78/20 medium carbon ferromanganese.
Source: Steel Guru
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