Chinese manganese ore market buoyed by surge in futures alloy prices

Spot port manganese ore prices in China recovered last week due to positive market sentiment, further supported by spikes in ferro-alloys futures prices.

Metal Bulletin’s 37% manganese ore index cif Tianjin, rose by 0.6% week on week to $6.39 per dry metric tonne unit on Friday August 10. The index had been steadily falling over the previous three weeks from a July peak of $6.86 per dmtu on July 13.

Market participants attributed the price recovery to the appreciation in silico-manganese futures prices.

“Traders raised offers on port ores after seeing silico-manganese futures prices [had gone] up, and also due to stabilizing seaborne prices,” a trader in Shanghai said.

Silico-manganese futures traded on the Zhengzhou Commodity Exchange (ZCE) hit highs of 8,800 yuan ($1,278) per tonne on Wednesday August 8, with more than 300,000 lots exchanging hands.

This compares with a futures price of 7,782 yuan per tonne on July 9.

Trading volume for the contract stood at 61,212 lots on Thursday as of 08:03 BST, where one lot equals five tonnes of silico-manganese.

The most-traded September silico-manganese contract on the ZCE has since drifted slightly lower to 8,624 yuan per tonne as of 08:03 BST on Wednesday August 15, down from its opening price of 8,704 yuan.

The trader also cited the yuan’s depreciation against the dollar as a reason for rising port prices. The yuan was recently valued at 6.9076 to the dollar on August 15, compared with 6.8457 on Friday August 10 and 6.8308 on August 3. The falling value of the yuan has pushed up the cost of buying manganese ore at Chinese ports, which are denominated in dollars.

While the cif Tianjin index specification does not include fot prices, data collected by Metal Bulletin revealed the latest free-on-truck (fot) prices for Australian lump with minimum metal content of around 46% were around 59 yuan per mtu in Tianjin, China’s major manganese ore trading hub. Fot prices for South African semi-carbonate ores were around 52 yuan per mtu, both up from last week’s level of 57 yuan and 51 yuan per mtu, respectively.

Deals for June shipments of semi-carbonate ores from South Africa were heard to have been concluded at $6.30-6.40 per dmtu cif China, up 4 cents from a week ago.

Downstream, silico-manganese smelters raised their offers last week to reflect the rising ores cost as well as the strong futures, Metal Bulletin understands.
Smelters also raised their offers in the hopes of putting more pressure on steel mills who will start issuing their September silico-manganese tenders in about a week’s time.

Ex-works silico-manganese offers were heard in a range of 8,600 yuan per tonne and above in the week to August 10, according to smelters.

As a result of the higher offers from smelters and bids from steel mills, Metal Bulletin’s Chinese silico-manganese assessment rose to 8,400-8,600 yuan per tonne on August 10, compared with 8,000-8200 yuan per tonne on Friday August 3.