It is reported that the boom price of Chinese silicomanganese is unable to foresee.

The current price of Chinese product is USD 1,450 per tonne CIF Japan but a lower price of USD 1,400 CIF is sporadically offered and a probability to fall further the price on a basic tone is supposed to exist. The background is due to the urgent circumstances of financing difficulties at producers and traders in China. For a reference, the price of Chinese silicomanganese at the end of October was USD 1,750 per tonne CIF Japan.

Chinese producers of manganese ferroalloys have concluded their contracts on imports of manganese ore with payment term of 90 day usance in many cases. The cargoes of manganese ore arrived in China during August to September of 2008 are thought to be now on due date to pay invoice amount and China imported 906,000 tonnes of manganese ore in July and 605,000 tonnes in August. Particularly, the quantity of manganese ore imported into China in July was the largest one in its history.

In order to cope with the fact that current price of silicomanganese has fallen to a lower level than its payable line, Chinese producers have been reducing their production of silicomanganese and, in some areas, their operation rate has come down to a very low level of 10 20%. The current market situation, which price of Chinese silicomanganese is falling to the nearest line to USD 1,000 per tonne to be not payable for its production cost, is promoting Chinese producers to perform a considerable reduction on production of silicomanganese.

Another reason, why part of producers and traders in China are in a hurry to dispose of their stocks of silicomanganese at discounted prices with regardless of its profitability, is the system to qualify exporters scheduled to be enforced from the 1st January of 2009 by the Central Government of China. Unless a Chinese company is qualified as a suitable exporter through investigation, this company is forced to withdraw from exports of ferroalloys and, therefore, Chinese producers and traders are in a hurry to dispose of their stocked cargoes of silicomanganese for realization.

A time to recover price of Chinese silicomanganese will be concentrated on the following points

1. Reflecting a revival of steel production in China domestic price of silicomanganese is expected to turn to improve.

2. The enforcement of regulations for exports of ferroalloys from January of 2009 will enable to restore order.

Steel mills of Japan have still continued the structure to hold back from purchase of silico-manganese but are anticipated to return to the market. However, the present aspect is still unable to foresee an improvement of the market for silicomanganese. – Steel Prices China/MySteel