GLOBAL MANGANESE WRAP: Low-grade ore keeps sliding on rising port stocks

Low-grade manganese ore prices continued to fall last week while imports to China offset the effect of rising silico-manganese futures prices.

  • Low-grade manganese prices keep sliding while supply grows
  • High-grade ore prices hold steady in thin trading 
  • Soaring silico-manganese futures prices blamed on speculation
  • Alloy prices under downward pressure in all regions outside China

Low-grade manganese ore prices dropped on Friday December 1 while port stocks rose in anticipation of further large deliveries in the coming weeks.

Metal Bulletin’s 37% manganese ore index, fob Port Elizabeth, dropped 10 cents to $4.43 per dry metric tonne unit, equal to $5.12 per dmtu on a cif basis.

Chinese manganese ore inventory at the Tianjin and Qinzhou ports rose to 2.3-2.4 million tonnes as of November 28 from 2.2-2.3 million tonnes on November 15.

Market participants attributed the rise in stocks to more South African and Brazil ores arriving at ports as well as slow consumption by alloy smelters.

A rebound in prices later in the week triggered by soaring silico-manganese futures prices on the Zhengzhou Commodity Exchange (ZME) failed to offset a sharp earlier dip.

Deals were initially concluded as low as $4.90 per dmtu and $5.00 per dmtu but miners agreed that prices for deals concluded later in the week were back at $5.15-5.25 per dmtu.

Metal Bulletin’s 44% manganese ore index, cif Tianjin, was flat at $6.16 per dmtu while the market awaited fresh offer prices from large miners.

Miners had been preparing to lower their prices for high-grade ore and buyers have called for price reductions but recent increases in silico-manganese prices caused miners to reconsider, sources told Metal Bulletin.

“Soaring silico-manganese prices and rising spot Chinese silico-manganese prices discouraged lower prices from miners, resulting in very sporadic trading volumes in high-grade ores,” a trader said.

The most traded January silico-manganese contract on ZCE hit 7,350 yuan ($1,111) per tonne on Thursday November 30, its highest since late September.

Several miner and buyer sources agreed that rising silico-manganese futures prices and the resulting bounce in the ore price later in the week are being driven mainly by speculation rather than changes in the fundamentals.

“It’s just driven by the futures prices; there is no fundamental reason for it. In the previous two weeks I had no buying interest but since Monday basically everyone is inquiring for material,” one ore supplier told Metal Bulletin.

There were modest increases in physical silico-manganese prices after Ningxia announced production cuts aimed at environmental protection.

Metal Bulletin’s price quotation for spot Chinese silico-manganese edged up to 6,500-6,800 yuan per tonne on December 1 from 6,400-6,600 yuan per tonne a week earlier.

Still, some sources said the cuts would be limited and lend minimal support to silico-manganese prices.

Metal Bulletin’s price quotation for Chinese ferro-manganese edged lower to 5,800-6,200 yuan per tonne on Friday from 6,200-6,250 yuan per tonne the previous week.

The market has been subdued after Hebei Iron & Steel lowered its December purchase price by 300 yuan per tonne.

Ex-China markets
Outside China, all manganese alloy markets were under pressure due to subdued demand and limited trading.

Metal Bulletin’s price quotation for silico-manganese, fob India, dipped to $1,070-1,140 per tonne from $1,130-1,150 per tonne previously.

Manganese alloy prices dipped in Europe while the end of the year approaches and large buyers secured large reductions compared with recent weeks.

Metal Bulletin’s price quotation for silico-manganese, delivered in Europe, dropped to €950-1030 ($1,129-1,224) per tonne.

Metal Bulletin’s price quotation for high-carbon ferro-manganese, delivered in Europe, dropped to €1,050-1,160 per tonne.

“Everyone is sold out and most customers are covered for the fourth quarter. We tend to quote higher, now we are not sure the market will follow,” one producer told Metal Bulletin.

The drop in alloy prices is outpacing ore prices, a second producer said, putting pressure on alloy producers.

“Alloy prices are definitely going lower but this is not the case for ore. We are going to face hard times with lower alloy prices and quite stable ore prices,” the source said.

In the United States, manganese alloys markets dipped further amid long-term contract negotiations for 2018.

Spot prices for high-carbon ferro-manganese, in warehouse Pittsburgh, dropped by $25 per tonne to $1,475-1,525 per long ton on November 30, according to American Metal Market’s latest assessment.

“High-carbon ferro-manganese has been on the downturn over the last couple weeks. It is clear most expect prices to reset at lower levels in the first quarter of 2017,” a supplier source said.

Quarterly and annual negotiations for next year have been more aggressive than expected – sources suspected market participants are concerned about excess inventory in the market.

It is also likely that, as 2017 ends, traders are clearing out excess inventories, sources said.

Silico-manganese prices, in warehouse Pittsburgh, slipped 1 cent to $0.59-0.61 per lb on November 30, according to American Metal Market’s latest assessment.

“Prices have slipped a bit as we’ve worked through quarterly negotiations but we aren’t seeing the big drop in prices that some may have been expecting. Numbers have held up pretty well to this point,” a supplier source said.