GLOBAL MANGANESE WRAP: Seaborne high-grade ore prices up as port, low-grade prices lose ground

Manganese ore prices continued to diverge on Friday June 16 as high-grade prices edged up on higher producer offers and low-grade prices weakened.

• Grades diverge as 44% index rises, 37% weakens
• Port prices drop in China
• Chinese manganese alloy prices under pressure
• Indian silico-manganese market strengthens
• Mixed performances for alloys in Europe and USA

Metal Bulletin’s 44% manganese ore index, cif Tianjin, rose 3 cents to $6.17 per dmtu on Friday. 

Metal Bulletin’s 37% manganese ore index, fob Port Elizabeth, fell 4 cents to $4.58 per dmtu. 

Spot prices for manganese in Chinese ports fell significantly as traders cut offers to boost sales and lock in profits ahead of the next round of purchasing by steel mills, when alloy prices could be lower.

“Mills may start their purchase by the next two weeks; people think spot silico-manganese price may soon lose ground in line with futures prices,” one trader told Metal Bulletin.

Silico-manganese futures prices have dropped significantly, dampening sentiment in both the ore and alloy markets. The most-traded September contact of silico-manganese on the Zhengzhou Commodity Exchange (ZCE) fell to its lowest level since early May to 6,154 yuan ($903) on Tuesday June 13, then closed at 6,274 yuan per tonne on Friday June 16, flat week-on-week.

“Silico-manganese futures prices remain weak, creating pessimistic sentiment. Ore traders all want to lock in profit and leave the market,” a major trader told Metal Bulletin.

A third trader predicted a drop in seaborne prices in response to the lower port prices.

“The port price drop is large; it caused traders to become reluctant to import so some low-priced seaborne deals may been heard,” the trader said.

Still, others pointed out that stocks of manganese ore – often an undermining factor for prices – have been falling sharply in recent weeks.

Metal Bulletin’s assessment of manganese ore stocks in Chinese ports stands at 2.55-2.85 million tonnes, compared with 2.85-3.05 million tonnes on May 31. 

“We have increased our price 10 cents since last week. Seasonally, prices can fall at this point in the year, but I gather stocks in China are still falling. Stocks were sent to other regions: Japan, Europe and India, so that’s reduced supply in China,” a miner told Metal Bulletin.

“There’s good demand outside China. I would not have expected such a decrease,” the miner added.

Increased exports are expected from South Africa in July and August, sources told Metal Bulletin. 

Metal Bulletin’s price quotation for domestic Chinese silico-manganese dropped 100 yuan week-on-week to 6,400-6,700 yuan per tonne on Friday June 16. 
 
Metal Bulletin’s price quotation for domestic Chinese ferro-manganese came in at 6,100-6,300 yuan per tonne on Friday, down from 6,300-6,400 yuan the previous week. 

Indian silico-manganese prices remained strong during the week, still heavily influenced by the recent rally in ore prices. 

Metal Bulletin’s price quotation for silico-manganese climbed 10 dollars to $1,100-1,130 per tonne fob, on increased offers and a lack of material available below $1,100. 

However, while prices remained supported by ore prices, many participants were not confident of a continued rally.

“Indian silico-manganese is around $1,100 fob. Prices are expected to weaken a bit. India is undergoing a change in taxation policy and hence all business is a little slow at present. People want to wait and see the impact of the new taxation system,” one source told Metal Bulletin.

“Also, the rupee has appreciated a lot and because of that I think exporting is not really viable. That also would probably have some impact,” the source added.

European SiMn prices dip on lower offers
In Europe, silico-manganese prices weakened as European sellers fought to attract buyers amid an unfavourable arbitrage compared with Indian material.

Metal Bulletin’s price quotation for silico-manganese, delivered in Europe fell to €1,060-1,100 per tonne from €1,100-1,150. 

“It’s a bit lower on silico-manganese in Europe, which is most likely due to seasonality issues. Third-quarter negotiations are under way and some low numbers are around, which is weighing on sentiment,” a producer said.

Metal Bulletin’s price quotation for ferro-manganese, delivered in Europe, rose to €1,220-1,290 per tonne from €1,200-1,280 per tonne previously. 

Sources noted a tightness in nearby material, but stronger availability and lower prices for third-quarter contract material, which is in the process of being negotiated.

Low stocks support US prices
In the USA, the ferro-manganese market maintained its strength, taking support from current inventory shortfalls. 

US spot prices for high-carbon ferro-manganese held firmly at $1,440-1,500 per long ton in warehouse Pittsburgh on June 15, flat week-on-week, according to Metal Bulletin sister publication AMM’s latest assessment. 

Mill and traders alike have been scrambling for material, as many have found themselves short.

“There is still some evidence of a significant shortfall in high-carbon ferro-manganese,” a supplier source told AMM.

“I’ve had calls from several different steel mills and traders this week looking for tonnage ranging from several hundred tonnes to over 1,000 [tonnes],” the source added.

“This market has been very firm. Numerous mills and traders are still seeking units for the third quarter, and they aren’t having an easy time doing so,” a second supplier source said to AMM.

As mills have been seeking additional material for the third quarter and second half, sources noted a more guarded approach taken by the mills as they seek to mask the shortfalls.

“Mills are trying to avoid causing any sense of urgency or price spike that may stem from them being shorter than previously believed,” a third supplier source said.

However, the market is aware of their situation, the second supplier source added.

“There has definitely been some behind-the-scenes work by the mills trying to cover up shortfalls, but the word is out at this point,” the second supplier source said. 

US spot prices for silico-manganese – for which supply is not as tight as ferro-manganese – edged down slightly to 63-66 cents per lb on June 15, down from 63-67 cents per lb previously, according to AMM’s latest assessment. 

“We aren’t exactly swimming in inventory at the moment, but it just isn’t quite as tight as ferro-manganese,” a supplier source said to AMM.

US silico-manganese prices have been at a healthy premium to the global markets in recent months, leaving the door open to new market entrants, sources said.

“We are seeing more material coming from places like Russia and Malaysia, given the wide price spread on US silico-manganese,” a third supplier source said.

“That is going to inevitably lead to some price correction back towards the global markets,” he added.

As multiple mills have open requests for quotation at this time, market participants expect to have a more concrete direction on pricing over the second half of June.

Metal Bulletin Manganese prices

Rena Gu

rena.gu@metalbulletinasia.com

Janie Davies

jdavies@metalbulletin.com

Fleur Ritzema

fritzema@metalbulletin.com

Chris Kavanagh AMM

christopher.kavanagh@amm.com

Published

Rena Gu

Janie Davies

Fleur Ritzema

Chris Kavanagh AMM

June 19, 2017

13:15 GMT

London, New York, Singapore