Manganese silicon will continue to decline in the short term

On Friday, manganese silicon** was listed on the Zhengzhou Commodity Exchange. The main contract of 1501 closed at 6,482 yuan/ton, which was 2.53% lower than the benchmark price of 6,650 yuan/ton. The author believes that there are two main reasons for the slump: First, Guangxi, the main producing area of ​​manganin, issued a notification in mid-July and began to implement the flood water price. The cost of manganese and silicon weakened; Second, the demand of downstream steel mills has shrunk since July. . Under the continuous influence of two factors, there is still room for further decline in the price of manganese silicon in the short term.

The short-term cost of silicon-silicon is shifting downwards, and supply pressure is increasing. Manganese-silicon production capacity is seriously excessive, and cost support is the core logic of price analysis. Manganese silicon production is a typical high-energy-consuming industry, and an average of one ton of manganese silicon consumes 4,000 kWh. From the point of view of the production cost of manganese silicon, the current price level, the manganese ore cost accounts for about 50%, the coke cost is about 10%, the cost of electricity accounts for 25% -35%, at the current stage, the price of manganese ore is stable. The price of electricity is the most important factor affecting the production cost of manganese silicon.

“Manganese Silicon Sees Guangxi”, as the main production site of manganese silicon, Guangxi's manganese silicon production accounted for about 28% in 2013, and the decline in Guangxi's manganese silicon cost will inevitably be transmitted to the entire manganese silicon market. In mid-July, the Guangxi Industrial and Commercial Information Commission and the Price Bureau jointly issued a notice for the implementation of the Fengshui electricity price from July to September. The electricity cost of Guangxi's manganese and silicon enterprises was reduced from 0.56 yuan/kWh to 0.47 yuan/ton, and the cost per ton of manganese silicon was estimated. With a direct drop of 360 yuan, the cost has fallen by more than 5%, the cost has dropped significantly, and the support has weakened.

In addition to Guangxi and the southwest, the other two large manganese-silicon-producing provinces, Guizhou and Yunnan, are often able to enjoy certain preferential tariffs in the season of abundant hydropower, thereby reducing the production cost of manganese-silicon and further lowering the production cost of manganese-silicon in the overall market. .

The drop in production costs will also lead to a recovery in the operating rate of manganese-silicon enterprises in Guangxi, which will increase supply pressure. In late July, the author went to Guangxi to conduct a manganese-silicon company survey and learned from this that, as of mid-July, Guangxi's manganese-silicon companies started operating at a rate of less than 50%, and the company’s loss was nearly 80%. The significant cost reduction will inevitably lead to the resumption of production of previously suspended companies and a rise in the operating rate, which will increase supply pressure.

The output of crude steel declined, and the demand of downstream steel mills shrank. From the composition of manganese silicon demand in 2013, steelmaking accounted for more than 90%. The significant decline in crude steel production reflects the weak demand for manganese silicon. On the one hand, due to the hot weather, July and August are the traditional off-seasons of steel production. In mid-July and late-July, average daily average crude steel production of key companies declined, especially in the second half of July, down by 2.8%. The overall output in July decreased from the previous month in June. On the other hand, the demand for steel downstream real estate continued to slump.

In the first six months of this year, the area of ​​new housing starts fell by 16.4% year-on-year. With the oversupply of real estate in third- and fourth-tier cities, some second-tier cities could not reverse the demand pattern of the real estate industry. According to the latest data released by the Ministry of Land and Resources, in the first half of this year, the area of ​​real estate supply fell by 7.7% year-on-year. As the land supply index has a certain leading significance, the decline in real estate supply space means that the decline in new real estate starts may be in the future. Continuation for some time.

1501 Contract price judgment and operation strategy Currently, steel mills mainly pay with 6 months acceptance**. After considering the cost of capital, when analyzing the actual spot price, the transaction price should be deducted at least 6 months acceptance** about 3%. Discounting costs. Since the Hebei Iron and Steel Manganese Silicon Bidding price is the wind vane of North China and even the entire manganese-silicon market, the author selected the recently released Hebei Iron and Steel Manganese Silicon Bidding price of 6,600 yuan/ton in August as the calculation basis. The spot price of manganese silicon is RMB 6402/ton. The interest rate of holding spot ** is 185 yuan/ton, the cost of warehousing is RMB 16/ton, and the profit of holding manganese silicon spot is negligible. According to the holding cost theory, the theoretical price of manganese silicon **1405 contract is the above three Add together, that is 6603 yuan / ton. Taking into account the cost reduction of manganese-silicon, the impact of rising supply and shrinking demand, the short-term price of manganese silicon is still bearish, and investors are advised to short above 6500 yuan/ton.