Coronavirus impact on key parts of the steel supply chain: Manganese ore and alloy
Restricted access to ore already in ports presents the threat of alloy shutdowns, both of which could provide short-term price support for ore and alloy, but the accompanying ore stockbuild in ports is expected to offset gains longer term.
Supply and stocks
- Ore supply from South Africa and Australia has not been much affected much by the coronavirus outbreak so far, although there are talks of supply disruption for some March-delivery lump.
- Ore stocks at major ports of Tianjin and Qinzhou: 4.36-4.69 million tonnes as of February 3, up 3.2% from January 20.
- Production of silico-manganese in northern China reported to be normal but some say there is potential for production cuts because of a lack of ore at plants resulting from difficulties delivering ore from port to plant.
- Many sources do not believe alloy smelters will cut output because the latest tender price from Hebei Steel has left them large profit margins (of around 500-1,000 yuan per tonne).
- Some mills are believed to not have abundant alloy stocks so are willing to lift their February-delivery silico-manganese purchase price; a few mills reportedly eager to source silico-manganese from alloy smelters to maintain normal production.
- Ore demand: Some alloy smelters are seeking vehicles to deliver ore from ports to plants because existing stocks will only enable normal production until February 8-13; tight road transport controls are hampering delivery.
- Alloy demand: Some mills in southern China heard to have been short of silico-manganese and eager to source material now; also said to be true for some mills in northern China as well.
Logistics since outbreak began
- Qinzhou port: Government of Qinzhou city heard to have banned local logistics companies from operating until February 9 and truck delivery is affected by strict road restrictions there. Alloy smelters outside the port area could not transport ore to their plants although a few alloy plants within the region could.
- Tianjin port: Trucks can travel in and out of the port, but it is not easy to find transportation companies to do so because many villages and counties are not allowing trucks to travel through.
- Some alloy smelters could not deliver January commitments of silico-manganese to mills, citing road restrictions and some mills have raised their prices to encourage alloy plants to send material to them.
- Alloy smelters also struggling to find vehicles to deliver alloy to mills.
- Shipping rates have dropped due to a lack of new orders for ore from China.
Price since outbreak began
- Ore prices held firm immediately after Chinese New Year but higher portside offer prices have been fueled by logistics constraints.
- Seaborne prices had been largely stable since mid-January. They weakened slightly on January 31 but higher offer prices have been reported over the past few days.
- Early indications of portside ore prices in both Tianjin and Qinzhou port suggested rises with trading activity picking up; some alloy smelters eager to source ore
- Manganese ore port index, base 37% Mn, range 35-39%, fot Tianjin China: 35.70 yuan per dmtu on January 31, unchanged from January 24.
- Manganese ore port index, base 44% Mn, range 42-48%, fot Tianjin China: 38 yuan per dmtu on January 31, also unchanged.
- Manganese ore index 37% Mn, cif Tianjin: $4.27 per dmtu on January 31, down 2 cents.
- Manganese ore 44% Mn, cif Tianjin: $4.30 per dmtu on January 31, down 1 cent.
- Silico-manganese 65% Mn min, max 17% Si, in-whs China: 6,000-6,150 yuan per tonne on January 31, flat week on week.