Seaborne manganese ore prices rise again on higher supplier offers

Seaborne manganese ore prices rose again in the week to Friday February 26, after some suppliers raised offer prices due to increasing freight costs, the stronger South African rand and expectations of lower South African exports in the coming weeks.

Fastmarkets’ manganese ore index 37% Mn, cif Tianjin rose by $0.12 week on week to $4.77 per dry metric tonne unit (dmtu) on Friday, up from $4.65 per dmtu a week earlier.

Fastmarkets’ manganese ore 37% Mn, fob Port Elizabeth index dropped further by $0.06 week on week to $3.55 per dmtu from $3.61 per dmtu on the same day.

The continual decline in the index reflects the rise in the average freight cost, which is deducted from the cif price to calculate the fob index.

Fastmarkets’ manganese ore 44% Mn, cif Tianjin rose by $0.05 week on week to $5.13 per dmtu on February 26 from $5.08 per dmtu previously.

Freight rates rose by 33% between January 29 and February 26 amid increased demand for vessels and competition for freight capacity from other commodities.

But many buyers showed reluctance to accept elevated prices due to the unchanged portside prices and their lack of confidence for a sustainable price uptick in the short-to-medium term, sources told Fastmarkets.

Fastmarkets’ manganese ore port index, base 37% Mn, range 35-39%, fot Tianjin, China climbed to 34.30 yuan ($5.29) per dmtu on Friday, up by 0.10 yuan from 34.20 yuan per dmtu the previous week.

Fastmarkets’ manganese ore port index, base 44% Mn, range 42-48%, fot Tianjin, China also edged up by 0.10 yuan to 38.20 yuan per dmtu on Friday, from 38.10 yuan per dmtu the week before.

Smelters in Ningxia province were said to be the main consumer of material in Tianjian port after buying interest from smelters in Inner Mongolia dwindled because of their production cuts, Fastmarkets heard.

“We only got a few inquiries from buyers in Inner Mongolia after the [Lunar New Year] holiday [from February 11-17],” a trader source said. “The most active buyers are smelters in Ningxia and since they are asking for large volumes, their bidding prices are quite low.”

Seaborne suppliers admitted they were encountering resistance to their new offer prices from buyers, but said there were good reasons for hiking the price.

“The freight has gone up, so who is going to sell at last week’s levels?” a supplier source said.

The rand traded in a range of 14.46 to 15.08 against the United States dollar in February, compared with 14.63-15.46 in January, according to currency exchange website Oanda.

The stronger rand means South African miners earn less in their own currency when they sell in dollars.

Severe rains between December and February caused flooding in South Africa and led to mining disruptions and parts of rail infrastructure being washed away.

“Lower tonnages are expected in April and May due to serious rains. There is extreme pressure on producers due to freight and rand strength,” a source at a miner told Fastmarkets.

With this expectation, participants do not anticipate a significant increase in inventories at ports in the foreseeable future.

Fastmarkets assessed manganese ore inventories at the main Chinese ports of Tianjin and Qinzhou at 6.48-6.69 million tonnes on Monday March 1, up by 0.7% from 6.44-6.64 million tonnes in the preceding week.

Silico-manganese price gain continues
Fastmarkets’ weekly price assessment of silico-manganese 65% Mn min, max 17% Si, in-whs China continued to move upward to 7,000-7,100 yuan per tonne, up by 200-300 yuan (3.7%) from 6,700-6,900 yuan per tonne the previous week.

Ulanqab Industrial and Information Technology Bureau issued a notice on Tuesday February 23 to ration March electricity usage for heavy energy-consumption companies, which was then adjusted on Thursday. The city of Ulanqab is a major ferro-alloy production hub in the autonomous region of Inner Mongolia.

The total March electricity usage by high energy-consuming companies should not exceed 2.7 billion kilowatt-hours (kWh), the notice said.

This is reduced by 800 million kWh and 1.1 billion kWh from 3.5 billion kWh for February and 3.8 billion kWh for January respectively.

“Ulanqab has set a target of total electricity at 10.4 billion kWh for the first quarter, the majority of which has already been consumed in the first two months, leaving very little allocation of electricity usage for March,” a trader source said. “And this will lead to further shutdowns of furnaces and production cuts in March.”

At the same time, the silico-manganese futures market strengthened on positive market sentiment.

The most-actively traded May silico-manganese futures contract on the Zhengzhou Commodity Exchange closed at 7,632 yuan per tonne on February 26, up by 288 yuan (3.9%) per tonne from 7,344 yuan per tonne on February 19. The May futures contract closed at 7,726 yuan per tonne on Monday.

But the bullishness was mainly supported by the supply side; the view of participants on the demand side was less optimistic.

“Many alloy producers would choose to deliver their silico-manganese to the exchange or futures company given the attractive prices, but you hardly see any transactions in the spot market because major downstream buyers are still holding sufficient stocks and many northern mills will have to cut their production in March,” a second trader source said.

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