GLOBAL MANGANESE WRAP: Ore prices fall faster on deteriorating raw materials demand

Manganese ore price declines accelerated last week as demand deteriorated in China.

  • Ore price decline accelerates
  • Chinese steel production cuts weigh on alloy prices
  • Indian alloy prices weaken as European markets hold
  • US alloy market succumbs to pressure

The recent drop in manganese ore prices accelerated on Friday November 17 as alloy prices fell further and raw materials consumption slowed.
Metal Bulletin’s 44% manganese ore index, cif Tianjin lost 24 cents to settle at $6.08 per dry metric tonne unit (dmtu).

Metal Bulletin’s 37% manganese ore index, fob Port Elizabeth lost 21 cents to $4.57 per dmtu, equivalent to $5.27 per dmtu on a cif China basis.

Data points reported to Metal Bulletin show manganese ore producers in South African cut prices to as low as $5.20 per dmtu.

“Major manganese ore miners in South African have reduced their prices to as low as $5.20 per dmtu for 37% manganese contained semi-carbonate ores, lower than previous week’s $5.35-5.40 per dmtu,” a manganese ore trader based in Shanghai said.

Miners outside China said Chinese buyers remained in the market but insisted on lower prices.

“There is no doubt that the market has weakened and will continue to weaken until mid February, when I think it will pick up after China’s Spring Festival. But demand is still there and the good news is the market is not collapsing,” a source at a miner told Metal Bulletin.

“Supply to China has been restricted due to production problems at some miners; there are just not the volumes that we saw over the past three months,” the source added.

Chinese traders told Metal Bulletin steel mills’ demand for manganese alloy has slowed noticeably and this can be seen in the stable manganese ore inventories.

Manganese ore stocks at the ports of Tianjin and Qinzhou stood at 2.2-2.3 million tonnes as of Wednesday November 15, slightly lower than two weeks prior’s 2.2-2.4 million tonnes.

“Manganese ore stocks at Tianjin and Qinzhou ports are comparatively stable in recent weeks due to slower consumption by manganese alloy smelters,” a manganese ore trader in Tianjin said.

Further downstream, prices for both silico-manganese and ferro-manganese weakened amid winter production cuts at steel mills.

Metal Bulletin’s price quotation for spot Chinese silico-manganese dropped to 6,200-6,500 yuan ($935-980) per tonne on November 17, slightly down from 6,200-6,650 yuan per tonne a week ago.

Metal Bulletin’s price quotation for Chinese ferro-manganese edged lower by 100 yuan per tonne on the low end to 6,200-6,500 yuan per tonne on Friday.

Hebei, China’s key steelmaking province, has decommissioned 29 converters that accounted for 21.78 million tpy of crude steelmaking capacity and 33 blast furnaces capable of producing up to 18.07 million tpy of pig iron.

Such a heavy production cuts mean ferro-alloys suppliers have to lower their offers in order to destock as quickly as possible, sources told Metal Bulletin.

Manganese alloy prices were also under slight pressure in India, amid thin trading.

Metal Bulletin’s price quotation for silico-manganese, fob India dropped $15 per tonne at the high end of its range to $1,130-1,165 per tonne on Friday.

EU, US manganese alloy prices
European silico-manganese and high-carbon ferro-manganese prices held but one consumer source indicated that cheaper material is becoming available on short term contracts, which, along with falling ore prices, will influence the spot market in the near future.

“We see pressure already; China is importing less ore and large volumes of Chinese steel production have stopped until March. I will not buy; I am expecting a further drop,” the source told Metal Bulletin.

Metal Bulletin’s price quotation for silico-manganese, delivered in Europe held at €990-1,050 ($1,167-1,238) per tonne.

Metal Bulletin’s price quotation for high carbon ferro-manganese, delivered in Europe held at €1,090-1,180 per tonne.

In the latest pricing session, US manganese alloys markets came under pressure as long-term contract negotiations for 2018 became more aggressive.

“It’s still early in the process to pinpoint where it will finally end up, but as formula contracts start to get more aggressive, it’s a big indicator to the market that the likely price trajectory is down,” a supplier source said.

Spot prices for high-carbon ferro-manganese, in warehouse Pittsburgh dropped $30 to $1,500-1,550 per long ton on November 16, according to American Metal Market’s latest assessment.

While spot market transactions were scarce during the week, prices were clearly showing weaker as suppliers reported failing to conclude transactions when they offered towards the high end of the quotation.

“We’ve been starting to lose some business above $1,550 which we were getting pretty consistently until the last week or so,” a second supplier source told American Metal Market.

Market participants noted that growing inventories were also weighing on prices.

“Looking at imports, we might have entered into an inventory overhang situation,” the second supplier source added.

US imports of high-carbon ferro-manganese soared throughout 2017, as inflows through the first nine months totaled 145,878, up 45.8% year-on-year.

“It has become clear that there are more than enough units around at this point, and the downward pressure is now showing up,” a third supplier source said.

Silico-manganese prices slipped to $0.60-0.62 per lb in warehouse Pittsburgh on November 16, down from $0.61-0.63 per lb previously, according to American Metal Market’s latest assessment.

“It’s becoming clear that expectations are that prices are going to be softer, rather than firmer going into 2018,” a supplier source told American Metal Market.

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