GLOBAL MANGANESE WRAP: Ore surges; alloys strengthen in Europe, India; Chinese alloys flat

Manganese ore prices jumped last week, supported by strong demand in the steel sector, recent robust alloy prices in China and a summer draw-down in Chinese ore stocks.

  • The 37% ore index jumped 11%
  • Alloy trading thin in China; expectations strong ahead of holiday
  • Indian silico-manganese prices hit fresh record high
  • European alloy prices find strength after summer
The 37% index surged 11% from last week to $5.09 per dry metric tonne unit (dmtu) fob Port Elizabeth, its highest level since January. The 44% index climbed to $6.32, a 3% rise from the previous week.

The market appeared to have finally found clear direction after limited movement in recent weeks, due to downstream demand firming and a gradual fall in stocks in China starting to have a significant impact on prices.

While shipments from South Africa have in fact been strong over the past few months, manganese ore consumption has been rising in recent weeks, so these stocks are quickly being depleted, sources in China said.

Inventories in the main Chinese ports of Tianjin and Qinzhou fell from over 3 million tonnes in April, to 2.35-2.7 million on August 23, according to Metal Bulletin’s survey.

Over the past two weeks stocks have climbed and stood at 2.6-2.8 million tonnes on September 6. But the draw-down in recent months has now been recognised, and buyers, aware of anticipated growth in steel demand, have been looking to secure units.

“This is really driven by strong demand. It’s fundamental now,” one seller explained.

“I’ve had so many enquiries, and Chinese stocks are down. It’s [a volume of enquiries] double the amount I’ve seen in the past,” he added.

“There are many people in the market, and no sign of a slowdown of consumption,” a second source said.

“There’s been a big squeeze in port inventories, and that’s created some tightness,” a third source noted.

“According our statistics, South African shipments to China in August are… mostly stable with the level of July shipments,” a second manganese ore importer said.

“The consumption of manganese ore has increased, with silico-manganese operation rates at higher capacity,” the second manganese ore importer added.

“So the rally of manganese ore prices is more about higher Chinese demand rather than lower exports from South Africa,” sources concluded.

“Now the shipments from Tianjin port are leaving quickly, on instant demand from alloys smelters. Inventories should be reducing the following day,” a shipping agency familiar with Tianjin port’s situation said.

One miner released a price of $5.65 per dmtu for November for 37% manganese content ores, much higher than October’s tender of $5.10 per dmtu, according to several Chinese importers and western sources.

A higher grade ore producer released a public tender price of $6.65 per dmtu for October delivery, 15 cents per dmtu higher than September’s tender of $6.50, according to Chinese sources.

The yuan’s appreciation in the past two months also gives support to the manganese ore price’s rally, sources said.

Onshore Chinese yuan (CNY) against the dollar has hit a new low at 6.4346 as of Friday September 8, lower than 6.6450 reported on August 10, and much lower than 6.8440 on June 26.

Prices around $5.75 per dmtu, cif, for 37% manganese ore were accepted by buyers “without hesitation”, with more enquiries on the table for the coming week, trader sources said.

“Carbon steel demand is good, and manganese alloys producers can make a good margin at the moment,” a trader source said.

“The appreciation of the yuan helps too; as actual raw material costs are cheaper," a second trader added.

Bullish expectations for alloy after trading volumes thin
Indeed, the demand for ore has been prompted by a significant interest in alloy making in China, where prices have been well supported in recent weeks.

Silico-manganese (min 65% Mn max Si) prices in China’s spot market were unchanged at 7,000-7,200 yuan ($1,076- 1,107) per tonne on Friday September 8, but spot prices are expected to gain support before the middle of November, according to sources.

However, recent silico-manganese trading has been thin, sources in China said.

“Hebei Steel has released its tender price for September, and the monthly purchasing by steel mills of silico-manganese has now almost finished. Until October tender prices are released, trading volumes will remain thin,” a silico-manganese trader said.

However, demand looks set to pick up, sources said.

“China’s Golden Week is coming up, so there will be a national holiday from October 1-8 this year. Steel mills will increase their purchase volumes before that time, which will support the positive outlook for silico-manganese prices,” a second silico-manganese trader said.

“Moreover, November silico-manganese production will decrease as a result of Beijing’s air quality pollution control. So ahead of that, we could see strong demand,” a third silico-manganese trader added.

The bullish expectations come despite a correction on the Zhengzhou Commodity Exchange (ZCE) last week.

The most-traded silico-manganese price on ZCE closed at 7,236 yuan per tonne on Friday September 8, slightly lower than the last Friday’s close of 7,318 yuan per tonne.

Chinese ferro-manganese (min 65% Mn max 7% C) prices were, meanwhile, unchanged at 6,700-6,800 yuan per tonne on Friday September 8, also amid thin trading volumes.

“The silico-manganese and ferro-manganese industry’s operational rates are set to peak at around this time of year, ahead of Northern China’s heating season, which takes place between the middle of November and the end of the year. Chinese silico-manganese and ferro-manganese producers will do their utmost to produce to satisfy solid-steel demand,” a major manganese ore importer said.

Strength in alloys elsewhere

The strength in ore prices continued to support Indian silico-manganese prices last week, prompting further gains and fresh highs.

Prices gained on the top end to reach $1,160-1,230, its highest level since Metal Bulletin began pricing this market in June 2014.

“Higher quotes are due to short supply,” one local source told Metal Bulletin.

“Indian suppliers are quoting $1,180-1,250 fob,” a second source said.

European manganese alloys prices have, meanwhile, climbed over the past week on renewed demand from consumers in the steel sector after the seasonal slowdown. The rally in European steel prices, such as plate, is expected to resume through September and may pull manganese alloy prices up.

However, end-used demand for finished steel products and the level of raw materials for steel production will have to be assessed through the month before the effect on manganese alloys markets is clear.

Silico-manganese was up €20 to €1,020-1,100 ($1,222-1,317) per tonne, with low phosphorous content (P 0.15%) at the higher end of the range and higher phosphorous content (P 0.25-0.30%) being offered towards the bottom end. Traders reported, or heard, that two deals for a total of 1,000 tonnes were carried out between €1,040-1,100 per tonne.

High-carbon ferro-manganese was up to €1,200-1,275 per tonne, from €1,180-1,250 per tonne, with one deal done at the top end of that range. Medium-carbon ferro-manganese was up to €1,725-1,840 per tonne, from €1,700-1,800 per tonne, with one deal between 1,000-2,000 tonnes reported at the top end of the range.

The US manganese alloys markets fell dormant last week, with very little spot market demand being reported.

US spot prices for high-carbon ferro-manganese levelled off at $1,530-1,600 per long ton on September 6, unchanged from the previous week, according to Metal Bulletin sister publication AMM’s latest assessment.

The lack of spot market activity led prices to flatten after prices strengthened to these levels the week prior.

Meanwhile, US spot prices for silico-manganese narrowed 61-63 cents per lb on September 6, down 1 cent on the high end from 61-64 cents, according to AMM’s latest assessment.

Metal Bulletin manganese prices

Fleur Ritzema

fritzema@metalbulletin.com

Ellie Wang

ellie.wang@metalbulletinasia.com

Charlotte Radford

charlotte.radford@metalbulletin.com

Susan Zou

susan.zou@metalbulletinasia.com

Declan Conway

declan.conway@metalbulletin.com

Published

Fleur Ritzema

Ellie Wang

Charlotte Radford

Susan Zou

Declan Conway

September 11, 2017

18:05 GMT

London, Shanghai, New York