Manganese ore has been a popular market for positioning and speculating in recent years, particularly in 2016 and 2017 when large profits were made by buying cheap manganese and squeezing stocks in ports.
A smaller-scale attempt was made to repeat that effect in the chrome ore market, when traders amassed about 500,000 tonnes of chrome ore in Chinese ports in July 2017, compared with at least 1 million tonnes of manganese ore in October 2016.
Although traders piled back into manganese later in 2017 and another rally ensued, most market sources doubt there is much scope for dramatic upside this year.
Traders have been put off by the fact that manganese ore has been hovering at relatively high levels for most of the year, sources said.
“The big risk takers are taking a wait-and-see approach on manganese. Traders... see significant upside on chrome, but on manganese they see a $1 upside and a $4 downside,” a manganese market source told Fastmarkets.
Chrome looks more attractive because it is coming off a lower base and the market is significantly weaker than it was in the first half of the year, sources added.
“Mostly, traders [see] a long way down on manganese but not much risk of chrome prices going lower,” a chrome trader told Fastmarkets MB.
Fastmarkets MB’s UG2 chrome ore index, cif China, was $172 per dry metric tonne unit (dmtu) on Friday October 19
The price traded as high as $245 per tonne in March and since dropping to $155 per tonne in August has been rising steadily ever since.
Fastmarkets MB’s 37% manganese ore index, cif Tianjn, was $5.98 per dmtu on October 19.
This year, manganese has traded as high as $7.57 per dmtu and as low as $5.30 per dmtu, compared with a high of $6.76 per dmtu and low of $2.23 per dmtu in 2017.
“It makes sense,” the trader added. “At $165-170 per tonne for chrome ore we are not going to see [it go] much lower, but with manganese ore at $6, there is a lot of risk. If you’re a Chinese trader you will want to take a position in chrome ore.”
Traders in China are increasingly switching their attention from manganese ore to chrome ore, predicting better upside potential, market sources told Fastmarkets this week.