GLOBAL MANGANESE WRAP: Seaborne ore prices follow port market higher

Manganese ore prices jumped again on Friday May 5 after miners joined Chinese port traders in raising their offers.

  • Ore prices rise again as miners raise offer prices
  • Port traders raise offers again
  • Alloy prices weaken in China
  • European, Indian alloy prices edge up
  • Logistics disruptions hit US alloy market

Metal Bulletin 44% manganese ore index cif Tianjin rose 47 cents to $5.65 per dmtu.

Metal Bulletin’s 37% manganese ore index fob Port Elizabeth rose 18 cents to $4.07 per dmtu, equivalent to $4.65 on a cif basis.

Prices started to rise during the last week of April – traders pushed up port prices amid predictions of an inventory squeeze.

Miners had initially kept offer prices for seaborne cargoes stable but by May 5 they had moved their offers up in response to traders lifting port prices again.

High manganese ore inventories in Chinese ports have been undermining prices for most of the year so far. But much of the material is tightly held and unavailable for trade; these so-called “frozen stocks” have made the market vulnerable to short-term rallies when buyers are unable to secure prompt material.

“There has been a continued improvement in sentiment. It looks like there’s some tightness on high-grade ore,” one manganese ore miner told Metal Bulletin.

“The second quarter is normally quite a busy time, and there was a surprise decrease in ore prices in January, so people had been cautious about buying,” the source added. “But demand has picked up this quarter and big traders in China have amplified the fundamentals; it’s the phenomenon of frozen stocks.”

Market participants continue to warn that short-term rallies caused by inventory squeezes are not underpinned by the fundamentals of supply and demand.

“The fundamentals don’t really support a big move up,” a source at a second miner told Metal Bulletin.

Still, several suppliers are reportedly sold out until at least June.

“There have been a number of enquiries from China but I haven’t offered as I don’t have the stock available until July,” the second miner source said.

Meanwhile, resistance is anticipated among manganese alloy smelters because physical alloy prices have been under pressure, sources in China warned.

“The rapid port price increase prompted miners to also raise their offers but so far I don’t think smelters are ready to accept the latest high ore prices while the alloys market is not so strong,” a trader in Beijing told Metal Bulletin.

Metal Bulletin’s quotation for the silico-manganese price in China dropped 100 yuan per tonne at the low end of the trading range to 6,400-6,800 yuan ($932-990) per tonne in warehouse China on May 5 while ferro-manganese prices held at 6,200-6,400 yuan per tonne in warehouse China.

The most-traded September silico-manganese contract on the Zhengzhou Commodity Exchange finished the week at 6,308 yuan per tonne on Friday May 5, down from 6,376 yuan a week previously.

“I am not sure if the rise is sustainable or not; smelters are still hesitating to buy ore while mills have refused to accept any price increase [for manganese alloy],” a second trader told Metal Bulletin.

Manganese alloy prices were stable or slightly firmer. Indian silico-manganese prices edged up to $1,050-1,110 per tonne fob India on May 5, up $10 on the low end from the previous week’s assessment.

The European price strengthened while market participants took encouragement from stronger ore prices.

Silico-manganese prices narrowed to €1,060-1,100 per tonne delivered in Europe on May 5 from €1,040-1,110 previously.

Ferro-manganese prices held at €1,200-1,280 per tonne delivered in Europe on May 5.

“People are mainly just covering bits and pieces but the tone is calm and order books are encouraging,” a manganese alloy producer told Metal Bulletin.

In the USA, spot prices for high carbon ferro-manganese narrowed to $1,380-1420 per long ton in warehouse Pittsburgh on May 4, down on the high end from $1,380-1,430 previously, according to Metal Bulletin sister publication AMM’s latest assessment.

Spot prices for silico-manganese held steadily at 65-68 cents per lb in warehouse Pittsburgh on May 4, according to AMM.

Market participants indicated that transactions have been infrequent because negotiations for the third quarter are yet to begin.

“There is very little going on at this point in the spot market. We should start seeing more mills coming out toward the end of May for the third quarter,” a supplier source told Metal Bulletin.

Tight supply, particularly for ferro-manganese, is limiting scope for downward pressure on prices despite the thin trading.

And market participants expressed concern over further regional tightness across all manganese alloy grades stemming from potential logistical issues amid high water levels in the Mississippi River.

“There is some worry about whether barges will be able to come in and whether there will there be material delays. This is something we have to watch for,” a second supplier source told AMM.

The second supplier source reported problems moving material to a desired location.

“The river has us in a bind because we can’t get up river. We have some material on a barge that needs to get off but we are having trouble getting it where we need to get it,” the source told AMM.

There are concerns that some buyers have signed up for insufficient medium carbon ferro-manganese to meet their steelmaking needs.

“Medium carbon supply is getting very tight, and we are seeing buyers concerned with whether they will be able to buy extra material if needed,” a third source told AMM.

Medium carbon ferro-manganese prices held at $1.08-1.14 per lb fob Pittsburgh on May 4, according to AMM’s latest assessment.