Sharp rallies in manganese ore prices occurred in October 2016 and December 2017, but so far in 2018 there have been few indications that such an event will be repeated, sources told Fastmarkets.

“I think the market will be relatively quiet,” one market source said. “We are in a period of relatively stability. I don’t see why [the price] should rise or fall.”

Both previous price rallies developed out of a weaker price environment than there is today.

The rally of 2016 was the sharpest, starting when manganese ore prices were $4.00 per dry metric tonne unit (dmtu) for 37% material on an fob basis and $4.70 per dmtu for 44% material on a cif basis.

It took 37% prices as high as $7.96 per dmtu fob and 44% prices as high as $9.22 per dmtu cif, before breaking in December of the same year and prompting a crash that left 37% prices at $2.23 per dmtu fob by March 2017.

The longer 2017 rally lasted well into March this year, peaking at $7.57 per dmtu fob for 37% material and $8.82 per dmtu cif for 44% material.

Manganese ore prices have not fully come down from the rally of late 2017, having been supported by strong downstream demand, which meant that predictions of another crash did not come true.

Fastmarkets’ 37% manganese ore index, fob Post Elizabeth, was $5.95 per dmtu on October 17.

Fastmarkets’ 44% manganese ore index, cif Tianjin, was $7.18 per dmtu, also on October 17.

“We expected manganese ore prices to have fallen by this time this year, but steel mills kept increasing their production, which provided support for manganese ore prices. We were surprised by that,” a second market source told Fastmarkets.

The rally of 2016 was caused by traders in China accumulating large volumes of ore early in the year and squeezing the market later.

The 2017 rally was triggered by soaring silico-manganese prices due to production cuts. This prompted much speculation in the futures market, which also drove up ore prices.

The main reason why a repeat of the 2016 rally is unlikely is because no party is believed to hold a dominant position in port stocks.

“No one is holding much stock in China. There is no trader or buyer with a position of enough significance to influence the market,” a third market source said.

The short duration of attempts to push up port prices in August this year, when the Chinese yuan weakened against the dollar, to compensate for the increase in import costs, proved that there were no large position-holders, the source added.

“The yuan has weakened significantly against the dollar. When this happens, traders should be able to push up the port price to compensate, but they didn’t have the positions to do it,” the source said.

The near- to medium-term performance of silico-manganese prices, which were the trigger for the 2017 rally, remains unclear amid questions over which among several market factors will have the greatest effect.

One of these factors is that about 2 million tonnes of manganese alloy production is expected to come on stream in the next few months. These projects are now building up stocks of ore for their feedstock.

Another factor is that recently-confirmed electricity supply cuts in China could remove about 25-50% of manganese alloy production, while expected steel production cuts, also in China, are likely to remove some demand for alloy.

And while the alloy production cuts may suggest an imminent reduction in ore demand and prices, the opposite can happen if smelters that remain open raise their alloy offer prices due to tighter supply. Thus could prompt fresh futures speculation and higher ore offer prices from miners.

“In 2017, the manganese ore rally was due to downstream alloy prices spiking, but no one really knows the steel mills’ consumption of downstream alloys. Everything is an estimation by us and by analysts,” the third source said.

“A rally could happen but the reasons for it would be completely different from previous years,” a fourth market source said.

Possible reasons for a price rally in 2018 include some unexpected market play by traders or speculators, similar to the events of 2016, or a major effect on alloy supply arising from new supply or cuts, or constraints on ore supply.

There have been times in recent weeks when some South African producers offered reduced amounts of standard low-grade ore into the market and offered off-grade material instead.

“The only thing that could cause a rally in manganese ore prices,” a fifth source said, “is if there is not enough standard low-grade ore available.”