2018 REVIEW: Seven things that changed in ores, alloys this year
Fastmarkets MB looks back at a year of changes in the ores and alloys markets.
Manganese ore market stability
Manganese ore prices were relatively stable in 2018, following two years of unprecedented volatility. This was the first year since 2016 that did not end in a sharp rally, resulting in a dull year for traders, but a lucrative time for producers. The market has been underpinned by strong demand from China, while Chinese silico-manganese futures contracts had far less influence on the ore market this year, despite being a key driver of price volatility in 2017.
Chinese silico-manganese smelters started holding monthly meetings to discuss ore and alloy prices. Agendas included establishing a price ceiling for manganese ore in March and keeping the wider manganese market stable in November. Market participants say the meetings have been quite successful in achieving their goals, but sometimes a consensus collapses shortly after an agreement, or wider market forces limit the smelters’ influence.
Silico-manganese capacity in China ramps up
Silico-manganese capacity in China was boosted by about 120,000 tonnes over 2018 up until November. Smelters have enjoyed high profit margins and their additional capacity has supported strong manganese ore prices. However the additional capacity, which has now reached 567,600-592,800 tonnes, means competition among smelters will intensify. This squeeze on ore consumers is expected to be passed onto producers, especially if Chinese silico-manganese production starts to exceed demand. As a result, the additional alloy smelter capacity will inject additional volatility into the ore market.
Chrome lost its shine
After a strong 2017 that piqued investor interest in the market, chrome prices have dipped to two-year lows amid high ore stocks in China and increased ferro-chrome supply competition in Europe. The greatest drop occurred in the Turkish lumpy chrome ore market, which hit $215-225 per tonne in mid-December, down from $295-310 per tonne at the start of the year. High carbon ferro-chrome prices in Europe dropped 21% across the year, largely due to an increase in off-spec Indian material in the market, which sparked fierce competition among sellers for market share.
Glencore marketing changes
Stuart Cutler will retire from his role as head of Glencore’s ferro-alloys marketing department at the end of the year, after 25 years at the company. Cutler’s departure leaves rising stars Jason Kluk and Ruan Van Schalkwyk to run the department as part of Glencore’s new generation of leadership. Kluk and Van Schalkwyk previously held senior trading roles for chrome and manganese respectively.
Ferro-vanadium prices rallied
Consolidating an increase that began in late 2017, ferro-vanadium prices achieved an unprecedented rally, before faltering in November. Fastmarkets’ European price quotation for ferro-vanadium was up more than 90% in mid-December, compared with the beginning of the year. At its height in November the price reached $126-128 per kg, compared with $46.50-49.50 per kg at the start of the year.
China’s molybdenum exports stalled
Molybdenum in China has been in short supply due to limited domestic availability, environmental inspections and stable demand from steel mills. Everything produced in China is used in the domestic market so the export market is only active when it is profitable for producers to do so. Comparatively higher domestic prices for much of 2018 mean China’s ferro-molybdenum exports have slumped this year. China exported a total of 3,842 tonnes of ferro-molybdenum in the first ten months of this year, compared to 6,858 tonnes in the same period last year, according to data collected by Fastmarkets. China’s demand for ferro-molybdenum is expected to be stable in 2019, meaning exports are likely to be similarly lackluster in future.