GLOBAL MANGANESE WRAP: Ore sentiment shifts upward

A shift in manganese ore sentiment has bolstered manganese alloy prices in the Asian and European markets.

Low-grade manganese ore prices continued to rise on Friday March 17 after the flurry of demand that started last week continued.

Metal Bulletin’s 37% manganese ore index, fob Port Elizabeth, rose 19 cents to $2.42 per dmtu, equivalent to $3.17 per dmtu cif. 
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Sources agreed there was little or no low-grade manganese ore business transacted below $3.10.

The increase was largely driven by buyers who came into the market with high bid prices.

Some buyers continued the trend of “averaging out” the purchase prices of their ample stocks. This involves buying more material at recent low prices to offset the high prices paid for most of their existing stock at the height of the 2016 rally.

“There are about 3.6 million tonnes of manganese ore in Chinese ports but the bulk of [this material] was bought in November and December at $8.50. Those holding it are trying to blend away some of their high price stock,” a source at a manganese ore miner told Metal Bulletin.

Rising silico-manganese futures prices have also helped to support manganese ore prices as market participants anticipate improved ore demand and higher prices further out.

“Futures prices are pulling the physical market up, but it will be short-lived given the stock situation,” a market source told Metal Bulletin.

“People are comfortable booking low-grade at either side of $3.00 when silico-manganese prices are running, because they don’t see significant downside at that level. But we will see stocks continue to increase at this price and the fundamental oversupply will be exacerbated,” the source added.

Metal Bulletin’s high-grade manganese ore index, cif Tianjin, dropped 2 cents to $4.02 per dmtu after a large volume of material was sold slightly below last week’s index price.

While activity has been limited, market participants experienced difficulty in attempting to acquire high-grade ore at low prices, as prices for the material have shown signs of stabilising.

Chinese alloy prices rise
The rise in low-grade ore prices has matched that of the rise in prices for spot silico-manganese, as well as its futures market. 

Chinese silico-manganese spot prices rose to 6,500-6,800 yuan per tonne March 17, up 18.8% from 5,400-5,800 yuan per tonne previously.

Market participants are reportedly playing the futures markets, which has helped to drive up prices for the material.

“The silico-manganese futures market is very active now. Also its volume is rising, so its influence on the spot market or even the manganese ore market is expanding,” a trader in Shanghai said.

However, some suggest speculation by outside investors is behind the rapid rise in pricing for silico-manganese on the futures market. 

“I think silico-manganese futures have gained because of speculation by investors. When you see that most ferrous futures prices have been rising recently, and consider that silico-manganese prices look low but the material is used as a raw material in steel making, then the price rises suggest it has attracted investors’ attention,” a Tianjin trader said.

Smelters this week also continued lifting their offer prices because of the pressure on them of high manganese ore costs, as well as the rise in futures prices.

“I’ve heard now that it’s difficult to buy cargo from smelters as most of them are not willing to do business. They are hoping for prices to rise further as their manganese ore costs are high,” a third trader told Metal Bulletin.

Chinese spot prices for high carbon ferro-manganese also increased to 5,500-5,700 yuan per tonne on March 17, up 4.7% from 5,200-5,500 yuan per tonne previously.

Meanwhile, silico-manganese prices in India jumped towards the end of last week, as expectations of a potential strengthening in ore prices lifted sentiment.

“All manganese-related products have shot up today. Suddenly, quotes have risen by 4-5 rupees per kg,” one Indian source told Metal Bulletin on Friday March 17.

Prices leapt to $945-985 per tonne on a fob India basis, up from $920-960 fob India a week earlier.

“The Indian market is very quick to react to a change in sentiment on ore,” a European source said.

European prices rise on tightness
Silico-manganese in Europe was, meanwhile, boosted slightly by the tight availability of spot material.

Prices inched up at the top end to €1,000-1,120 per tonne on March 17, up 1% from €1,000-1,100 a week before.
“Some mills require prompt shipments within a few weeks. Cheap Indian material cannot reach Europe so rapidly, so that’s where there are some higher numbers around,” a trader said.

Some buyers have had to pay more in order to secure material promptly, but availability looks set to loosen.

Ferro-manganese prices found even more strength in Europe last week, up €50 euros on the low end to €1,200-1,275 per tonne delivered for 78% manganese and 7.5% carbon.

But similarly to silico-manganese, the availability of material for prompt delivery has tightened in recent weeks, with limited numbers of sellers offering cargoes.

“There’s been a bit of an uptake on European ferro-manganese,” a European trader said to Metal Bulletin.

“We have limited spot material available,” a producer said, adding he had heard indications as high as €1,295 for spot delivery. However, he had seen significantly lower indications for forward delivery.

“There’s some pressure on the Q2 prices. Talk is around €1,000-1,020 for Q2,” he added.

Some market participants similarly expect that more material will hit the spot market in the next few weeks from India and elsewhere, potentially pushing prices downward.

US alloy markets remain static
US manganese alloy prices have largely held flat as spot market activity has stalled, while the remaining second-quarter negotiations are finalised.

US spot prices for high carbon ferro-manganese remained unchanged at $1,400-$1,475 per gross ton on March 16, according to Metal Bulletin sister publication AMM’s latest assessment.

Despite the outside pressure from the previously falling ore prices and lower alloy prices overseas, market tightness has helped to keep prices firm.

“A mill came to us for more material for second-quarter delivery, but we had to decline the offer,” a supplier source told AMM. “We are tight, and we just don’t have any more material to offer at this point outside of our current contract customers.”

Market participants had been waiting for the return of the US Defense Logistics Agency Strategic Materials (DLA), in anticipation that a potential sale would relieve some of the tightness in the US market.

This came to fruition last week as the DLA announced that it will hold a sale on March 21 for 15,000 short tons of high carbon ferro-manganese. 

It is suspected that this may help alleviate supply-side concerns, potentially driving prices downward.

US silico-manganese prices slipped slightly to 65-68 cents per lb on Thursday March 16, down 1 cent on the low end from 66-68 cents per lb previously.

While the market has been affected by the threat of cheaper inbound material, the recent reversal in low-grade ore and silico-manganese sentiment overseas may help to soften the expected blow.

“It will be interesting to see how the market reacts here following the rebound in Chinese prices as well as ore prices this past week,” a silico-manganese supplier source told AMM. “The market had been expected to crash downward in time, but this reversal may prevent the expected precipitous fall.”