GLOBAL MANGANESE WRAP: Low grade ore prices jump; steel production curbs spook Chinese alloy market

Low grade manganese ore prices jumped on Friday August 11 as miners raised offer prices, citing continued strong demand and a stronger steel sector.

  • Low grade ore prices jump 19 cents
  • Steel production restrictions turn alloy sentiment bearish
  • Indian silico-manganese prices edge up
  • European silico-manganese prices weaken
  • Ferro-manganese prices keep rising in the USA

Metal Bulletin’s 37% manganese ore index, fob Port Elizabeth rose 19 cents to $4.52 per dmtu.

Metal Bulletin’s 44% manganese ore index, cif Tianjin rose 5 cents to $6.08 per dmtu.

Sales and offer prices reported to Metal Bulletin in the week to August 11 by suppliers outside China were almost all above $5 per dmtu.

“Demand from alloy smelters is the best it has been for two-and-a-half years,” one miner told Metal Bulletin.

But offer prices in Chinese ports continued to weaken amid concerns that prices have already risen too far.

“I think the current ore prices are too high to accept, so we prefer to wait and see for the time being,” a second trader in Shanghai said.

Others pointed out that manganese ore and alloy price increases could soon be curbed by lower steel production, after the Hebei provincial government recently announced steel production limits for November to March.

Steel prices surged after the announcement last week, then tumbled on Friday after the China Iron & Steel Assn (Cisa) said market participants had overestimated the scope for price rises resulting from environmental restrictions.

“The port market is weak; most market participants are talking about the news of steel production limits. It’s hard to forecast how much production will be cut, but it’s not a good news for the alloys. We are not feeling optimistic about the near-term outlook,” a trader in Shanghai said.

Metal Bulletin’s price quotation for spot Chinese domestic silico-manganese dropped 100 yuan per tonne at each end of its trading range to 6,800-7,200 yuan ($1,020-1,080) per tonne on Friday August 11.

Metal Bulletin’s price quotation for spot Chinese domestic ferro-manganese prices held at 6,500-6,600 yuan per tonne on Friday.

Cisa’s view also weighed on silico-manganese futures prices, as the most-traded September silico-manganese contract on Zhengzhou Commodity Exchange closed the week at 6,952 yuan per tonne on Friday, down 4.45% on the day and also lower than the previous week’s close of 7,078 yuan per tonne.

In India, silico-manganese prices clawed back some of the previous week’s losses as producers raised offer prices again.

Metal Bulletin’s price quotation for silico-manganese, fob India rose to $1,110-1,145 per tonne, from $1,100-1,135 per tonne the previous week.

In the USA, high carbon ferro-manganese prices edged up for the eighth consecutive week as a result of constrained regional supply.

Spot high-carbon ferro-manganese, in warehouse Pittsburgh reached a fresh 87-month high of $1,520-1,580 per long ton on August 10, compared with $1,510-1,580 per long ton the previous week, according to Metal Bulletin sister publication AMM’s latest assessment.

Spot market supply remains tight and well consolidated, despite claims recent high imports should preclude such tightness, market sources told AMM.

US imports of high-carbon ferro-manganese reached 82,910 tonnes over the first six months of the year, up 43.2% from 57,916 for the same period last year.

But market participants indicated overall available supply remained well short of those expectations, largely as a result of strong demand.

“People are overlooking that the mills consuming high-carbon ferro-manganese are running very strong,” a supplier source said.

“The flat-roll guys use this material the most and they have been taking in much more than anticipated,” he added.

The subdued release from the DLA Strategic Materials this year has also helped offset higher imports.

“You have to look at the whole picture; the DLA sold a little over half of what was expected, so more than 20,000 tons are missing from the market,” a second supplier source said.

Despite allotting 50,000 tons to the fiscal year 2017, the DLA awarded only 26,600 tons during the period. In the past, the DLA has typically sold the full allotment, including the full 50,000 tons in fiscal year 2016.

US spot prices for silico-manganese, in warehouse Pittsburgh held at 61-64 cents per lb on August 10, unchanged from the previous week, according to AMM’s latest assessment.

Despite the inactivity, market participants indicated the market outlook has looked steady, with prices in less danger of decline than had previously been expected.

“Everyone expected prices to come off, given US prices are at a premium in comparison to the global markets, but it really hasn’t come to fruition,” a supplier source told AMM.

In Europe, silico-manganese price lost ground as suppliers started to concede that cheaper material is becoming available.

Metal Bulletin’s price quotation for silico-manganese, delivered in Europe weakened to €1,020-1,080, down €20 at the low end.

“There are reports of cheap material in Europe,” one producer told Metal Bulletin.

Metal Bulletin’s price quotation for ferro-manganese, delivered in Europe held at €1,200-1,260 per tonne.

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