China’s manganese ore imports hit record high in May, market wary of impact on prices

Chinese imports of manganese ore soared to a record high in May after comparatively low prices for ore and strength in domestic alloy markets in late February and early March led to increased bookings for cargoes loaded in March and April.

China imported 3.36 million tonnes of manganese ore in May, up by 46.3% from 2.29 million tonnes in the prior month, according to official, but unconfirmed, data seen by Fastmarkets.

May’s volume was up by 50.3% from the 2.23 million tonnes imported in the same month of 2018 and marked the highest monthly inflow into China ever, the data showed.

Buying appetite among Chinese traders and consumers picked up considerably in late February and early March this year amid a strong desire to replenish their inventories after seaborne ore prices, especially those for low-grade material, slid to around one-year lows.

Typically, it takes around 35-45 days and 15-20 days respectively for manganese ore shipped from South Africa and Australia - China’s leading suppliers of manganese alloy raw materials - to arrive on Chinese shores.

Fastmarkets’ 37% manganese ore index, cif Tianjin, averaged $6.17 and $5.90 per dry metric tonne unit (dmtu) in March and February respectively, which compares with a monthly average of $6.81 per dmtu last November – the highest monthly average since April 2018.

Similarly, Fastmarkets’ 44% manganese ore index, cif Tianjin, averaged $6.44 and $6.49 per dmtu in March and February respectively, down sharply from an average monthly price of $7.17 per dmtu in November 2018.

In addition, rising silico-manganese prices in China during March amid strength in the futures market further drove Chinese buyers to increase their procurement rates at a time when they were already restocking their inventories following the week-long Chinese New Year holiday on February 4-10.

Fastmarkets’ Chinese silico-manganese, ex-works price hit a 2019 peak of 7,500-7,700 yuan ($1,092-1,121) per tonne on March 22, rising steadily from an assessed price of 7,150-7,300 yuan per tonne on March 1.

But some market participants spoken to by Fastmarkets in recent days have said they are wary of high inventories at Chinese ports following the strong inflows of manganese ore into the country last month.

Fastmarkets’ assessment of manganese ore stocks at the main Chinese ports of Tianjin and Qinzhou climbed to 4.06-4.18 million tonnes on June 3, the highest level since Fastmarkets launched this assessment in April 2017. Stocks were most recently assessed at 3.85-3.93 million tonnes on Monday June 24.

Despite the fact Chinese spot availability has been tighter than port inventories suggest due to “frozen stocks” held by both traders and consumers, market participants were still concerned over the sustainability of the recent turnaround in port ore prices which previously had been under persistent downward pressure since late March.

Fastmarkets’ China port index for 37% manganese ore increased by 2.3 yuan to 47.5 yuan per dmtu (equivalent to $5.95 per dmtu, excluding value-added tax and port handling fees) on June 21.

Fastmarkets’ China port index for 44% manganese ore edged up by 1.7 yuan to 49.3 yuan per dmtu on the same day (equivalent to $6.22 dmtu per tonne, excluding VAT and port handling fees).

“Manganese ore imports rose quickly in May, especially material from Ghana,” a trader source said. “It creates more uncertainty for the price outlook if that material flows into the spot market extensively and quickly.”

China imported 823,857 tonnes of Ghana-origin manganese ore in May, a record high and accounting for a quarter of total Chinese imports last month.

Since the beginning of this year, market participants have noted increasingly fierce competition between traditional suppliers of low-grade manganese ore in China’s manganese alloy market with Ghanaian material.

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