GLOBAL MANGANESE WRAP: Ore indices stabilise as Chinese port prices rise

Manganese ore prices were largely stable last week, supported by a steady flow of enquiries and alloy futures strength in China, while alloy prices elsewhere also resisted large swings.

  • Manganese ore prices resist pressure from weaker demand
  • Futures strength and steelmaking demand support manganese alloys in China
  • Summer maintenance hits ferro-manganese in Europe
  • US ferro-manganese prices continue ascent amid constrained supplies

Ore prices diverge
Manganese ore prices for high and low grade manganese ore diverged slightly last week amid continued demand for 37% material and a lull in buying activity for 44% ore.

Metal Bulletin's 37% manganese ore index was calculated at $4.06 per dmtu, up 3 cents week-on-week.

Good buying interest offset the effect of good supplies, facilitating the slight increase in prices.

"There is a little bit of oversupply but the demand is quite good, I have enquiries I simply can't meet," a producer source said.

Meanwhile 44% manganese ore prices came under pressure from a lack of urgent demand but resisted a more dramatic swing in light of limited liquidity.

Metal Bulletin's 44% manganese ore index settled at $5.85 per dmtu, cif Tianjin, down 2 cents compared with the previous week's calculation.

"People only want to buy if it's a really attractive price, but nobody is actually closing very much," a trader said.

Overseas miners are yet to announce their new offer prices, and buyers in China reported offers as high as $6.50 per dmtu cif China for Australian ore shipped in August, unchanged from July’s offers.

"We won’t buy at this price, I think not many people are willing to accept as this price is higher than the current port level, while its delivery is in August or even in September," a major trader in China said.

Manganese ore prices in Chinese ports moved up slightly last week with sentiment supported by improving domestic alloys prices and a rising futures market.

Trader offers on high-grade manganese ore were reported at 51-53 yuan (about $6.2-6.5) per dmtu, fot Tianjin, up 1 yuan from the previous week’s level.

South African semi-carbonate material traded at 37-38 yuan per dmtu during the week and peaked as high as 40-42 yuan by the end of the week, up from a mainstream level of 35-36 yuan the previous week.

Futures strength, demand support Chinese alloys
Market participants in China do not anticipate a large decline in ore prices over the coming weeks as a result of rising steel production and good demand for alloys.

"Alloys demand is good and smelters are running a certain profit now, therefore I don’t think there is much room for ore prices to drop," a third trader said.

Domestic manganese alloy prices held firm in light of robust demand and strength in the local futures market.

The most-traded September silico-manganese contract on the Zhengzhou Commodity Exchange rose to its highest level since June 1 on Friday July 7, peaking at 6,600 yuan per tonne before closing the day at 6,564 yuan, up from the closing price of 6,130 yuan per tonne on June 30.

In the physical market, Metal Bulletin assessed the domestic Chinese silico-manganese price at 6,400-6,600 yuan per tonne on July 7, stable for a second week.

Chinese ferro-manganese prices were assessed at 6,100-6,300 yuan per tonne on July 7, unchanged for a third consecutive week.

FeMn weakens in Europe
In contrast, suppliers cut their offers for ferro-manganese in Europe after encountering weaker spot demand from the continent’s steel markets.

European ferro-manganese prices dropped to €1,200-1,260 per tonne ($1,364-1,433) delivered, from €1,220-1,290 per tonne previously.

Steelmakers in Europe have undertaken their traditional maintenance and repair programmes, resulting in plant closures of around three weeks during July and August, with the effect of weakening spot demand for raw materials.

European silico-manganese prices held firm for a second consecutive week, maintaining a trading range of €1,040-1,080 per tonne, delivered.

Export prices for silico-manganese from India, typically more exposed to fluctuations in the 37% manganese ore price, ticked slightly higher last week.

Indian silico-manganese is trading in a range of $1,060-1,110 per tonne, fob India, according to Metal Bulletin’s assessment, up $10 on the high of the range compared with the previous week’s assessment.

FeMn supply concerns persist in the USA
In the USA, silico-manganese prices held flat at 62-65 cents per lb on July 6, unchanged from the previous week, according to Metal Bulletin sister title AMM’s assessment.

The majority of steel mills are covered for the third quarter, with inactivity leaving spot prices unchanged.

"The market has really quietened down, and there is really only one mill out looking for some material right now," a supplier source told AMM.

Spot prices are expected to see an adjustment downwards in the fourth quarter, with forward deals for the final quarter of the year already agreed at lower prices, market sources said.

"There is a bit of a difference on the pricing dynamic in the short term in comparison to the longer term and through the end of the year," a second supplier source explained.

"Prices have really been holding up for the third quarter, but looking forward we are seeing some more flexibility on pricing […] given the spread between US and global prices, it isn’t surprising that we are seeing things even out over the longer term," he added.

Meanwhile tight high-carbon ferro-manganese supplies in the USA continued to provide support to the market, pushing prices higher once again.

High-carbon ferro-manganese ascended to $1,470-1,520 per long ton on July 6, up $10 on the low end on the range from previously, according AMM’s latest assessment.

Suppliers have been able to continuously elevate offering prices in recent weeks.

"The high-carbon ferro-manganese market is pretty tense at the moment with inventory very tight and demand pretty firm," a seller said.

Traders are still restocking and several suppliers noted sales to traders between $1480-1500 per long ton over the last week, and supply concerns are not expected to ease in the near term.

"What we are seeing is that there has not been enough coming in to meet demand, and there is still ground to make up on supply" the second supplier told AMM.

"With prices overseas where they are, I don’t see where that is going to come from aside from a few producers with no incentive to sell cheaply to the trade," he added.



To view this report in PDF form, with more graphs and tables, please click here for Metal Bulletin's manganese ore index newsletter.

Rena Gu

rena.gu@metalbulletinasia.com

Charlotte Radford

charlotte.radford@metalbulletin.com

Chris Kavanagh AMM

christopher.kavanagh@amm.com

Declan Conway

declan.conway@metalbulletin.com

Published

Rena Gu

Charlotte Radford

Chris Kavanagh AMM

Declan Conway

July 12, 2017

13:50 GMT

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