Coronavirus impact on key parts of the steel supply chain: Manganese ore and alloy

Restricted access to ore already in ports presents the threat of alloy shutdowns, both of which could provide short-term price support for ore and alloy, but the accompanying ore stockbuild in ports is expected to offset gains longer term.

Supply and stocks 
  • Ore supply from South Africa and Australia has not been much affected much by the coronavirus outbreak so far, although there are talks of supply disruption for some March-delivery lump. 
  • Ore stocks at major ports of Tianjin and Qinzhou: 4.36-4.69 million tonnes as of February 3, up 3.2% from January 20. 
  • Production of silico-manganese in northern China reported to be normal but some say there is potential for production cuts because of a lack of ore at plants resulting from difficulties delivering ore from port to plant. 
  • Many sources do not believe alloy smelters will cut output because the latest tender price from Hebei Steel has left them large profit margins (of around 500-1,000 yuan per tonne). 
  • Some mills are believed to not have abundant alloy stocks so are willing to lift their February-delivery silico-manganese purchase price; a few mills reportedly eager to source silico-manganese from alloy smelters to maintain normal production.
Demand 
  • Ore demand: Some alloy smelters are seeking vehicles to deliver ore from ports to plants because existing stocks will only enable normal production until February 8-13; tight road transport controls are hampering delivery.
  • Alloy demand: Some mills in southern China heard to have been short of silico-manganese and eager to source material now; also said to be true for some mills in northern China as well. 
Logistics since outbreak began 
  • Qinzhou port: Government of Qinzhou city heard to have banned local logistics companies from operating until February 9 and truck delivery is affected by strict road restrictions there. Alloy smelters outside the port area could not transport ore to their plants although a few alloy plants within the region could. 
  • Tianjin port: Trucks can travel in and out of the port, but it is not easy to find transportation companies to do so because many villages and counties are not allowing trucks to travel through. 
  • Some alloy smelters could not deliver January commitments of silico-manganese to mills, citing road restrictions and some mills have raised their prices to encourage alloy plants to send material to them.
  • Alloy smelters also struggling to find vehicles to deliver alloy to mills.
  • Shipping rates have dropped due to a lack of new orders for ore from China. 
Price since outbreak began 

See also - Coronavirus impact on key parts of the steel supply chain:
Iron ore
Coking coal
Chrome ore and alloys
Steel

Janie Davies

jdavies@fastmarkets.com

Jon Stibbs

jon.stibbs@fastmarkets.com

Amy Lv

amy.lv@fastmarkets.com

Published

Janie Davies

Jon Stibbs

Amy Lv

February 06, 2020

15:54 GMT

London, Shanghai