Production cuts at Ningxia Tianyuan to keep supporting manganese flake, ferro-chrome markets – sources

Production curtailments at major Chinese producer Ningxia Tianyuan will continue to support manganese flake and ferro-chrome markets, market participants have told Metal Bulletin.

Last month, Ningxia Tianyuan, the world’s biggest manganese flake producer, cut manganese flake output by around 16,000 tonnes per month after one of its three facilities were closed for maintenance, a source at the company told Metal Bulletin at the time.
Ningxia Tianyuan has a production capacity of 800,000 tonnes per year.
The other two factories that produce manganese flake are operating at full capacity, the source at the company said, but market sources told Metal Bulletin more production at Ningxia Tianyuan facilities will be cut at the end of the month.
A removal of even more material from the market will likely send prices of manganese flake higher, market participants said.
Ningxia Tianyuan accounts for around 40% of world’s manganese flake production.
“There is more demand than supply at the moment and prices are set to continue to go higher,” a manganese trader said.
Still, little spot activity is taking place in Europe, market participants noted, which has caused the price rally to falter.
“Chinese traders are sitting on their manganese flake stocks while European buyers are holding back,” another market participant said.
“Several Chinese companies stopped offering again, talking about upcoming Ningxia problems during this summer,” a second trader said.
Metal Bulletin assessed the manganese flake in-warehouse price at $2,300-2,500 per tonne on Friday June 15, unchanged from the midweek assessment but down from highs seen in April of $2,495-2,640 per tonne.
Prices jumped up more than 14% in mid-April to the highest level since December 2016 on a continued supply squeeze in Europe.
“I am getting inquiries for June, July but I am holding back with selling my material [because] I don’t know how to buy it back. Lots of my shipments have been delayed,” a third trader said.
Manganese flake prices started the year at $1,800-1,950 per tonne and have been in an upward trend for most of the year mainly due to production stoppages amid environmental inspections in China.
Ningxia Tianyuan halted production at the end of last year due to environmental inspections, prompting the first increase in manganese flake prices this year.
The nationwide campaign against environmental violations has forced some smaller miners, smelters and flotation plants across 30 different Chinese provinces to close since the beginning of last year.
Ferro-chrome supply tightens
Meanwhile, Ningxia Tianyuan’s 16,000 tpm ferro-chrome production line halted on May 18, a source at the company told Metal Bulletin. The producer is now operating at 30% of its ferro-chrome production.
The production stoppage is likely to last up to two months until mid-July, according to the company source.
This adds to the recent production cuts of around 50,000 tpm in major ferro-chrome production hubs of Inner Mongolia, and over 40,000 tpm curtailed in other regions, including Sichuan and Guizhou.
Supply in China’s spot market has noticeably tightened, market participants said, with prices for the material rebounding to 7,300-7,400 yuan ($1,141-1,156) per tonne on Friday June 15, up from the lows seen in early May of 6,850-7,000 yuan, which were last seen in late June 2017, according to Metal Bulletin’s historical data. 
Some market sources told Metal Bulletin that Ningxia’s recent output reductions, both in manganese flake and ferro-chrome, are linked to China Huarong Asset Management being under investigation for graft. The company is alleged to be Tianyuan Ningxia Manganese Industry Co’s (TMI) financial backer.
But Ningxia Tianyuan said the China Huarong Asset Management investigation has no impact on the company, when Metal Bulletin contacted the producer at the time the investigation started.
The company was unavailable for comment when contacted by Metal Bulletin this week.
The company acquired Jersey-headquartered Consmin last year, which owns the Woodie Woodie mine in Australia’s Pilbara region.

Anna Xu

anna.xu@fastmarkets.com

Ewa Manthey

ewa.manthey@fastmarkets.com

Published

Anna Xu

Ewa Manthey

June 19, 2018

12:55 GMT

London, Shanghai