Supply squeeze continues to push manganese flake prices to multi-month high

Manganese flake prices climbed to a fresh multi-month high this week on a continued supply squeeze with the Lunar New Year holiday expected to disrupt supply further.

Metal Bulletin assessed the manganese flake in-warehouse Rotterdam price at $2,075-2,220 per tonne on Wednesday February 14, up 1.8% from the previous assessment.

The last time manganese flake prices climbed to that level was in May last year.

“The only material you are able to find now is for shipment in the second half of March. That material will only arrive in May. It’s very tight in Rotterdam. People are still believing in higher prices,” a European trader said.

“I’m bidding in China but they won’t offer anything now,” a second trader said. “The market is quickly moving up on the Ningxia story and environmental inspections.”

“I think the rally is overdone. But if you are short you need to pay higher numbers,” the second trader added.

The world’s largest manganese flake producer – Ningxia Tianyuan – halted production at the end of last year amid ongoing environmental inspections in China, prompting the first increase in manganese flake prices this year. But it has since restarted its operations.

“Production has restarted but Ningxia still has a lot of open orders. I’m still waiting for my delayed 600 tonnes of material. Last I heard it was being moved to the port,” a third trader said.

Ningxia Tianyuan has a production capacity of 800,000 tonnes per year, according to market sources.

The nationwide campaign against environmental violations has forced some smaller miners, smelters and flotation plants across 30 different Chinese provinces to close since the beginning of last year.

“They [Ningxia Tianyuan] are not offering anything for export and trying to fulfil their domestic commitments for now, driving prices higher,” another market source said. “Once they start offering [for export], prices will come down.”

Adding to the production disruptions are electricity supply restrictions caused by cold weather and snowstorms in the southern parts of China, including Hunan and Guizhou provinces, which are major production hubs of manganese flakes, along with Ningxia and Chongqing provinces.

The snow blizzards forced the closure of smaller manganese flake plants, according to market sources, since heating domestic households is a priority.

“The smaller producers have stopped production for now and won’t restart until March when workers are back from Chinese New Year holidays,” a market source in China said.

“It’s going to be tight for at least the next two months,” the source added.

Offers were heard at up to $2,400 per tonne during the pricing session on Wednesday.

“We are signed on for long-term contracts and we need to guarantee we have enough material to fulfil our obligations,” the second trader said.

“What we have right now is enough to last us until the end of April because I don’t foresee any material arriving here from China till then. We are not able to offer anything on the spot market for now,” the trader added.

The national holiday, starting this week in China, will disrupt supply further, market participants noted. Lunar New Year is on February 16 this year and has already seen most Chinese market participants departing.

“In December you were able to buy at 1,650-1,750 [per tonne], now you can’t get anything below $2,000 and it’s not looking like the rally is going to stop anytime soon,” the first trader said.

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