South African manganese prices up as freight cost eases, but margins still thin

Manganese markets were quiet in the week ended Friday August 27, with buyers expecting miners to reduce their offer prices for October shipments to match the port markets.

“[Miners] must at least offer at a level equal to the port markets to attract buying interest, otherwise smelters will just buy from the spot market,” a manganese ore buyer said. “And traders would further lower their purchase amounts with the absence of speculation opportunities.”

Fastmarkets’ manganese ore port index, base 37% Mn, range 35-39%, fot Tianjin, China, edged up by 0.10 yuan per tonne to 34.10 yuan ($5.27) per dry metric tonne unit (dmtu) on Friday, from 34 yuan per dmtu the previous week. This would be equivalent to $4.52 per dmtu excluding value added tax (VAT) and port handling fees.

The corresponding manganese ore port index, base 44% Mn, range 42-48%, fot Tianjin, China, edged up by 0.20 yuan to 39.60 yuan per dmtu on the same day, from 39.40 yuan per dmtu a week earlier. This would be equivalent to $4.52 per dmtu excluding VAT and port handling fees.

Both low- and high-grade portside markets consolidated, with most sellers showing a firmer attitude, citing the high costs of their materials.

“We’ve had no business because we could literally make losses by selling at less than 34 yuan [per dmtu]. Our average costs have climbed, with the latest arrival of cargoes booked at around $4.70 [per dmtu],” a trader said.

That said, a small number of deals were heard at lower prices, with sellers attempting to destock because of rising storage costs.

Despite this, the gradual improvement in production in Inner Mongolia also enhanced many participants’ confidence in the near-term market.

“Smelters [in Inner Mongolia] ramped up their production to 70-80% of normal levels, compared with only 50% in July,” a second trader said. “This means faster consumption of feedstock, [and] even though many of them still hold quite [good levels of] stocks, they will need to procure sooner or later.”

Some buyers decided to purchase before prices moved up further, while some held back while waiting for downstream steelmakers to set their purchase prices for September-delivery silico-manganese.

“We are planning to replenish our stocks but there is no rush to do so. After all, there is abundant availability at ports,” a silico-manganese producer said.

Fastmarkets assessed manganese ore inventories at the main Chinese ports of Tianjin and Qinzhou at 5.62-5.76 million tonnes on August 30, up by 3.83% from 5.36-5.60 million tonnes a week earlier.

South African prices on an fob basis rose slightly, supported by an easing in freight rates.

“Things are getting a little looser, but [prices are] still very high historically,” a producer told Fastmarkets.

Despite the slight easing of seaborne freight costs, sellers were reported to be reluctant to move material by road, due to the thin margins. Moving manganese ore by truck is more expensive than by rail, but there was only limited rail availability.

“It’ll support the market eventually, but there’s a lot of inventory to get through first,” a seller told Fastmarkets.

Fastmarkets’ price assessment for manganese ore 37% Mn, fob Port Elizabeth, edged up by $0.02 per dmtu week on week on August 27, to $2.89 per dmtu.

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