GLOBAL MANGANESE WRAP: Ore pressured lower by Chinese port price cuts, alloys follow

Manganese ore prices retreated on Friday June 23, coming under pressure following sharp falls in Chinese port prices, while global manganese alloys prices were broadly flat to weaker.

  • Chinese traders cut ore prices in ports
  • Chinese alloy markets expected to continue to slide; July tender prices expected lower
  • European alloy prices flat, yet threatened by weakening Indian prices
  • US ferro-manganese market remains tight, while silico-manganese weakens ahead of summer lull

Traders cut Chinese port ore prices
Manganese ore prices weakened last week, as buyers sought material at far reduced prices on the back of port price falls in China.

The Metal Bulletin 37% manganese ore index dropped $4.06 per dmtu on a fob Port Elizabeth basis on Friday June 23, down from $4.58 per dmtu a week earlier.

The 44% index fell only slightly to $6.10 per dmtu on a cif Tianjin basis, down from $6.17 per dmtu previously.

“It’s been a week of very few deals, but with the bids and offers I’m hearing, I wouldn’t be surprised to see a move lower. Chinese deals are taking place at the equivalent of $4.50 [per dmtu],” a trader told Metal Bulletin.

“It looks like a weaker market. There’s been lower demand out of China,” a producer source said.

While market participants noted a slip in Chinese demand, port manganese ore prices in China moved sharply down this week due to large price cuts from some major traders who are pessimistic about the market outlook.

“There’s too much coming from South Africa. Spot prices in China have fallen to 35-38 [yuan per dmtu], and with 1.3 million [dmtu] per month leaving South Africa in May-July, it’s definitely weakening,” a second producer source told Metal Bulletin.

Port offers from traders on high-grade ores like Australian lump were at 50-52 yuan (about $6.1-6.3) per dmtu, down from its level of 54-56 yuan per dmtu in the previous week; South African semi-carbonate lump was traded at 35-38 yuan per dmtu on June 23, compared with 43-44 yuan per dmtu a week earlier, according to sources in China.

Given the low port price, traders as well as smelters showed no intention of buying fresh ores as miners still had not cut their offers yet.

However, some market participants expressed a different outlook regarding the current market situation.

“Apart from some traders aggressively cutting prices, I can’t see many changes in the market fundamentals. As you see, inventories in the ports and at smelters are both low, while the situation for downstream mills is not bad, they are running comfortable margins now,” a second trader said.

“I don’t think miners are willing to follow the port market and make large cuts to prices now, at least this month, they won’t,” a third trader said, adding that prices may not fall significantly in the near term.

Downtrend in Chinese ores and alloys prices expected to continue

However, Chinese ores and alloys prices are expected to continue in their downward trend as increased shipments in July and rising port inventories will drag prices lower, according to some market participants.

Furthermore, participants stated that miners may be willing to lower their offers to attract sales as the current price level is much higher than their costs.

Mills are expected to set their July tender prices this week with price cuts widely expected due to the weaker demand seen in the market recently.

Metal Bulletin assessed the domestic Chinese silico-manganese price at 6,400-6,600 yuan per tonne on June 23, down 100 yuan on the high end of the range compared with a week earlier. Meanwhile, the Chinese ferro-manganese price was assessed at 6,100-6,300 yuan per tonne, unchanged from the previous assessment.

In addition, a fall in silico-manganese futures prices may add further downward pressure to spot market prices.

The most-traded September silico-manganese contract on the Zhengzhou Commodity Exchange (ZCE) fell to its lowest level since April 26 at 6,024 yuan per tonne on June 21, before closing at 6,130 yuan per tonne on Friday June 23. This compares with its close of 6,274 yuan per tonne on June 16.

European silicomanganese prices hold, but threatened by Indian material

Indian silico-manganese prices fell to $1,080-1,100 per tonne, fob, down from $1,100-1,130 per tonne previously, tracking 37% manganese ore prices lower.

Bids came in from European buyers as low as $1,050 per tonne, but are yet to be accepted by producers in India.

The volume of higher-quality silico-manganese with 65% manganese and 16% silicon entering Europe is fairly small, market participants told Metal Bulletin. More common is the export of 60% and 50% grade material, which is reportedly being shipped to Italy for blending with higher grade silico-manganese.

In Europe, silico-manganese prices fell for a second consecutive week, with material in ready supply.

Silico-manganese is trading in a range of €1,040-1,080 ($1,163-1,208) per tonne, delivered in Europe, according to Metal Bulletin’s assessment, down from €1,060-1,100 per tonne previously.

European ferro-manganese prices were unchanged at €1,220-1,290 per tonne, delivered.

US ferro-manganese market remains tight despite quiet conditions

The US high-carbon ferro-manganese market held firm, despite reduced market activity.

US spot prices for high-carbon ferro-manganese inched $10 higher on the low end of the range to $1,450-1,500 per long ton on June 22, according to Metal Bulletin sister publication AMM’s latest assessment.

While traders continue to enter the market for small lots to cover shortfalls, spot activity levels have slowed down in recent weeks.

“The market is still firm, but it is definitely getting a little quiet. There are no real big opportunities out there right now,” a US supplier source told AMM.

“At this point, most of the mills are covered, so outside of a few truckloads here and there, there isn’t much happening,” a second US supplier source said. “Given how close we are to July, that isn’t overly surprising.”

Despite the slowdown, small sales to both end users and traders have been continued to be transacted as high as $1,500 per long ton.

Meanwhile, US spot prices for silico-manganese slipped slightly to 62-66 cents per lb, down 1 cent on the low end from 63-66 cents per lb previously, according to AMM’s latest assessment.

With the US market approaching the slower summer months, prices have been slipping in recent weeks.

“Some numbers have been a bit more aggressive, as I expect some suppliers are looking to secure sales volumes before the market enters a lull in the summer,” a third US supplier source told AMM.

One large mill in particular was able to secure significant tonnages for forward purchase later in the third and fourth quarter at below index numbers.

“This market hasn’t been as tight as ferro-manganese, and the competition has been a bit more aggressive in recent weeks,” a fourth US supplier source explained.

“Suppliers want to make sure they are able to place tonnages before it is too late,” he added.

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