Chinese manganese ore markets retreat with sentiment dented by Covid-19 lockdowns
The market for both grades of manganese ore softened during the week to Friday March 25, with port prices falling and concerns over demand following Covid-related lockdowns in some major steel-producing areas, including Tangshan
Fastmarkets’ calculation of the price index for manganese ore 37% Mn, cif Tianjin was $5.59 per dry metric tonne unit (dmtu) on Friday, down by $0.10 per dmtu, or 1.76%, from $5.69 per dmtu one week prior. This was the first downward move the index has recorded since the start of this year.
“Sentiment is definitely down in response to the rise in Covid cases in Tangshan,” a producer source said.
Tangshan, China’s top steelmaking city, was locked down last Tuesday to contain growing Covid-19 infections. Local steel production has been affected, with producers struggling to have their raw materials delivered.
Similarly, steelmakers in southern China including those in Jiangsu province have had to lower their production due to the impact of Covid-19, participants told Fastmarkets.
The hampered downstream production weakened market sentiment for manganese ore and alloys, with some participants expecting the lower demand to lead to falling prices for lower-grade material in the coming weeks.
“There will be big price falls when producers have to offer their material again,” a trader said
“I expect we will see a gradual softening in prices as producers fight for liquidity,” a second producer source of lower-grade material said. “Demand in China will determine what happens next.”
Transport costs and currency movements may support the falling market in forthcoming weeks, according to a market participant.
“Transnet [South Africa’s logistics provider] is a mess so everyone is having their rail slots cut,” the second producer source said. “And trucking costs are already exorbitant.”
South Africa’s truckers face competition for trucking space from the chrome ore and coal markets prior to a jump in diesel costs, which is expected to be implemented in April.
“The market is really quiet and will remain so until we have the April tenders,” a third producer source said. “I think if you had to sell, there would be appetite at around $5.63 per dmtu.”
There was limited trading activity for both low- and high- grades of manganese ore over the week with many market participants awaiting clear direction.
Fastmarkets’ calculation of the price index for manganese ore 44% Mn, cif Tianjin was $7.80 per dmtu on Friday, a drop of $0.05 per dmtu, or 0.64%, from $7.85 per dmtu a week earlier.
Some participants were relatively more positive in terms of the high-grade manganese ore market, citing supply tightness and strong demand from non-China markets.
“Unless miners could improve their production and ship more cargoes to China, the supply and demand imbalance might well intensify in the near term,” a second trader said.
Fastmarkets assessed manganese ore inventories at the main Chinese ports of Tianjin and Qinzhou at 4.82-4.88 million tonnes on Monday March 28, down by 1.42% from 4.85-4.99 million tonnes the previous week.
Port markets correct downwards
Weakness has started to emerge in port markets, with prices for both low- and high-grade manganese ore correcting downward amid thin liquidity.
Fastmarkets’ calculation of the manganese ore port index, base 37% Mn, range 35-39%, fot Tianjin China slid for a second week to 40.40 yuan ($6.34) per dmtu, down by 0.70 yuan per dmtu, or 1.70%, from 41.10 yuan per dmtu the previous week.
Fastmarkets’ calculation of the manganese ore port index, base 44% Mn, range 42-48%, fot Tianjin China moved down by 0.80 yuan per dmtu, or 1.31%, to 60.40 yuan per dmtu, from a historic high at 61.20 yuan per dmtu on March 18.
The downward correction came after suppliers were incentivized to sell their material by the continual price rises in the past several weeks.
The enhanced willingness to sell has weighed on prices, while buyers slowed down their buying ahead of steelmakers’ announcement of the April-delivery silico-manganese purchase price.
It was broadly anticipated that steelmakers would offer an increase to purchase material given the rising production costs brought by elevated manganese ore prices. But participants cast concerns over their demand for feedstock concerning the current production impacts.
Fastmarkets’ weekly assessment of silico-manganese 65% Mn min, max 17% Si, in-whs China was 8,300-8,600 yuan per tonne on Friday, down by 200 yuan per tonne, or 2.31%, from 8,500-8,800 yuan per tonne a week earlier.