GLOBAL MANGANESE WRAP: Ore grades diverge, low grade pushes silico-manganese prices higher

Manganese ore grades diverged on Friday May 12 as miners and port traders increased low-grade offer prices, pushing alloy prices higher, as high-grade ore volumes shrank week-on-week.

  • Low-grade manganese ore prices jump
  • Average high-grade ore price drops on thinner trading
  • Silico-manganese prices rise in China and Europe
  • Third quarter alloy buying kicks off in Europe
  • Material displacement firms US prices
  • US supply tight, consolidated heading into third quarter negotiations

Metal Bulletin’s 37% manganese ore index, fob Port Elizabeth rose 31 cents to $4.38 per dmtu.

Metal Bulletin’s 44% manganese ore index, cif Tianjin dropped 16 cents to $5.49 per dmtu.

Individual suppliers’ sales and offer prices for high-grade ore rose week-on-week, but the highest prices achieved during the previous week, which accounted for a large volume, were not repeated, meaning the average price for the week was lower.

In total, 36 data points were reported to Metal Bulletin’s indices, representing more than 360,000 tonnes of manganese ore business.
“I have a lot of enquiries and several times the normal number of customers,” one miner told Metal Bulletin.

High manganese ore inventories in Chinese ports have been undermining prices in recent months, but much of the material is in strong trader hands and only available at high prices, sources in China said.

“Port availability is not ample because most cargoes are held by major traders. These traders are holding their offers high, so I think prices will stay firm for a while,” a third trader said.

Others agreed that prices would likely remain firm in the near future, mainly due to trader activity. But some warned that in the absence of sustained demand growth, a correction or even a crash will occur a few weeks out, unless traders squeeze inventories further.

“I think it’s going to collapse again in a few weeks. It has a bit of momentum but I don’t see it going much higher unless there is some serious trader activity,” a market source told Metal Bulletin.

“In terms of fundamentals, I can’t see a reason for it to go much higher,” the source added.

Further downstream, silico-manganese smelters lifted their offers to reflect the increase in production costs.

“Smelters lifted their offers this week due to the high manganese ore price but they are still hesitating to purchase fresh ores as their alloy sales remain less than robust,” a trader told Metal Bulletin.

Metal Bulletin’s silico-manganese price quotation, in warehouse China rose to 6,500-6,800 yuan ($942-985) per tonne, up from 6,400-6,800 yuan previously.

Ferro-manganese held at 6,200-6,400 yuan per tonne, in warehouse China.

Still, China’s steel market has been weakening in recent weeks, meaning mills are likely to resist higher prices, market participants said.

“Steel prices have moved down so mills will continue to put downward pressure on raw materials prices,” a second trader told Metal Bulletin.

Silico-manganese futures prices also kept rising during the week, leaving the most traded September contact on the Zhengzhou Commodity Exchange at close at 6,354 yuan per tonne on Friday May 12, up from 6,308 yuan a week earlier.

In Europe, silico-manganese edged up to €1,080-1,120 ($1,180-1,224) per tonne, delivered, as ferro-manganese held at €1,200-1,280 per tonne, delivered.

Enquiries for third quarter material have started coming in early, one supplier told Metal Bulletin, adding that this is likely due to anticipation of higher prices on the back of the ore price rally.

“We’ve had some enquiries for the third quarter, including some from unexpected customers. I’m expecting prices to pick up because we don’t normally have third quarter enquiries this early,” the supplier said.

“Mills are starting to see that ore prices are up. They got caught out by rising ore prices in the fourth quarter of last year and my view is they feel alloy prices will follow ore higher, so they’re coming to the market today,” the source added.

Indian silico-manganese prices weakened slightly to $1,040-1,100 per tonne, fob, from $1,050-1,110 per tonne previously.

The US high-carbon ferro-manganese market elevated slightly this week, as material displacement issues helped to support spot pricing.

US spot prices for high-carbon ferro-manganese climbed to $1,390-1,430 per long ton on May 11, up $10 from $1,380-1,420 per long ton previously, according to Metal Bulletin sister publication AMM’s latest assessment.

Market participants noted that logistical issues due to high water levels on the Mississippi River disrupting barge shipments over the previous two weeks had resulted in material displacement.

While sources indicated that the rivers officially crested at this point, the lingering effects are still being felt in the market.

“I have actually received a lot of enquiries from traders this week, a few of which I do not typically get enquiries from, who were looking for high-carbon ferro-manganese to help fill contract shipments in the Chicago area presumably while waiting for their material to arrive,” a supplier source told AMM.

In addition to the material displacement issues, healthy prices for high-grade ore continue to support global pricing, market participants said.

“High-carbon ferro-manganese has to stay relatively firm because global prices for high-grade ore have held fairly firm,” a second supplier source told AMM.

The lack of attractive import options in conjunction with peak market pricing in the USA has fostered a cautious attitude with regard to restocking inventories in the country.

“Everyone is very cautious with how much they are bringing in so there is a little bit of a stand-off,” a third supplier source told AMM. “Demand is okay, but people are not rushing to take on positions.”

US imports of high-carbon ferro-manganese totalled 23,267 tonnes through the first quarter of 2017, down 40.7% from 39,265 tonnes over the same year-ago period, according to data from the US Commerce Department.

“There is definitely a stand-off that has developed where traders are not going to bring material into the USA unless they can get a formula price or sell it immediately back to back sale. No one is taking that risk of taking on a position at current prices, so it is getting very tight,” the second supplier source said.

As the market supply remains tight and consolidated amongst the large producers, market participants suspect pricing will continue hold firm moving forward.

“US consumers are going to keep paying a huge premium to the international market because there aren’t many options without traders bringing it in,” the second supplier source added.

US spot prices for silico-manganese maintained flat at 65-68 cents per lb on May 11, according to AMM’s assessment.

While the tight market continues to provide support for pricing, market participants indicated a lack of spot market activity has left pricing standing still.

With some large mills expected to enter the market for second half and third quarter requirements over the next couple of weeks, the demand lull is expected to break.

Market participants expressed confidence that current prices would hold up through the upcoming negotiations.

“There is a tightness starting to emerge with all major producers, as mills have already been taking very strong volumes on contracts,” a supplier source told AMM.

Similar to ferro-manganese, US imports of silico-manganese have been subdued through the first quarter, as inflows totalled 65,844 tonnes, down 16.1% from 78,511 tonnes during the same quarter last year.

“Traders are hesitant to take positions at these prices, so whatever is coming in is fairly well consolidated. Suppliers will continue to have some pricing power heading into the upcoming negotiations,” a second supplier source told AMM.

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