Chinese seaborne manganese ore prices soften on depreciation of yuan

Meanwhile, portside prices of manganese ore increased on active bookings from smelters and amid improved sentiment after Chinese government stimulus policies added to liquidity in the country’s property market.

Seaborne

Both higher-grade and lower-grade manganese ore seaborne indices fell after a sharp depreciation of China’s currency against the US dollar and with a possible increment of port inventories expected at the end of September, Fastmarkets heard.

Fastmarkets’ manganese ore index, 44% Mn, cif Tianjin was calculated at $4.33 per dry metric tonne unit (dmtu) on Friday, a fall of 3 cents from $4.36 per dmtu one week prior.

Buyside contacts expressed concerns about increased import costs after the yuan devalued sharply against the dollar.

One Chinese manganese ore trader said the exchange rate movements had led to dwindling profit margins following purchases of Gabonese ore.

The exchange rate was 7.34 yuan to $1 on September 11, compared with 7.20 yuan to $1 on September 4, with the yuan depreciating by 2% in one week, according to Oanda.com.

The expected arrivals of huge volumes of Gabonese ore at the end of September may add to supply pressures, industry participants said.

Fastmarkets’ weekly manganese ore index 37% Mn, cif Tianjin was calculated at $3.54 per dmtu on Friday, a fall of 2 cents from $3.56 per dmtu one week prior.

Meanwhile, the depreciation of the South African rand mitigated the impact of “drastic” diesel price rises which have added to trucking costs in South Africa, a producer source told Fastmarkets.

But the source added that producers may wait to implement changes to trucking rates based on the weaker rand, due to the volatility of exchange rate movements in recent weeks.

The rand was valued at 19.20 rand to $1 on Friday, depreciating by 2.13% from 18.80 rand to $1 a week earlier.

Combined port inventories of manganese ore at Qinzhou and Tianjin ports stood at 5.48-5.75 million tonnes on Monday September 11, compared with 5.60-5.87 million tonnes on previous Monday, according to Fastmarkets’ data collection.

“The port inventories remain high. Even the news of manganese ore supplier WMA’s plan to cut exports from October work little in pushing up market confidence,” a second Chinese manganese ore trader said.

Freight rates increased during the week due to several factors, including a drought in the Panama Canal and high demand for grains shipments from Brazil, tightening the global supply of vessels.

Fastmarkets’ manganese ore index, 37% Mn, fob Port Elizabeth was calculated at $2.74 per dmtu on Friday, a week-on-week drop of 5 cents from $2.79 per dmtu.

Portside

Portside prices of manganese ore in China rose slightly on Friday on improved sentiment among buyers and sellers, after Chinese stimulus policies for the property market were released and smelters restocked for the Golden Week holiday in the nation (September 29-October 6).

Fastmarkets’ calculation of the manganese ore port index, base 44% Mn, range 42-48%, fot Tianjin China was 38.50 yuan ($5.33) per dmtu on Friday, up by 0.10 yuan from 38.40 yuan per dmtu on September 1.

Fastmarkets’ weekly low-grade manganese ore port index, base 37% Mn, range 35-39%, fot Tianjin China stood at 31.00 yuan per dmtu on the same day, up by 0.20 yuan from 30.80 yuan per dmtu previously.

Beijing and Shanghai lowered the downpayment ratios to 35% for first house buyers in the cities on September 1, following the same policies announced in Shenzhen and Guangzhou on August 30.

“The release of such policy fired liquidity in [China’s] property market, which drove up futures markets of commodities and enhanced market confidence,” a Chinese manganese ore trader source at Tianjin port told Fastmarkets.

Sellers of manganese ore at ports raised the prices by 0.20 yuan per dmtu as a result, the trader source added.

Manganese alloy smelters broadly accepted the rise due to their restocking needs for the upcoming long holiday.

“It is time for smelters to replenish,” another port seller source said. “I can feel the deals increase and port inventories decrease a little bit.”