Ningxia Tianyuan has reduced manganese flake output by around 16,000 tonnes per month due to one of its three facilities closing down for maintenance, a source at the company told Metal Bulletin.

Ningxia Tianyuan has a production capacity of 800,000 tonnes per year, according to market sources.

It is not yet known how long the output cut will last, the source at the company said.

The other two factories that produce manganese flake are operating at full capacity, the source added.

A removal of 16,000 tpm of manganese flake from the market is likely to send prices of the minor metal higher, market participants told Metal Bulletin.

“Prices are set to go higher,” a trader in Europe said. “It’s difficult to get offers from China and Ningxia is not selling any material at the moment.”

“People, who have material in Europe, are holding back with their offers, and if you need prompt material you need to pay much higher prices,” a second European trader said.

“I was only able to source one offer and even then it was only for 50 tonnes,” a third trader said. “Everyone thinks prices will rise again. Prompt prices are still around $2,500 in Rotterdam and for shipment we are nearer $2,000 plus,” the trader added.

Metal Bulletin assessed the manganese flake in-warehouse price at $2,150-2,450 per tonne on Friday May 18, steady on 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.

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.

But market sources told Metal Bulletin that Ningxia’s recent output reduction is linked to China Huarong Asset Management, Tianyuan Ningxia Manganese Industry Co’s (TMI) alleged financial backer, being under investigation for graft.

Ningxia Tianyuan said the China Huarong Asset Management investigation has no impact on the company, when contacted by Metal Bulletin.

Karen Ng in Singapore contributed to this article.