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Global manganese: Ore sentiment shifts upward

Mar 20, 2017 | 05:01 PM | Christopher Kavanagh

Tags  manganese ore, manganese alloy prices, silico-manganese prices

NEW YORK — 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 March 17 as the flurry of demand that started last week continued.

AMM sister publication Metal Bulletin’s 37-percent manganese ore index f.o.b. Port Elizabeth rose 19 cents to $2.42 per dry metric tonne unit (dmtu), equivalent to $3.17 per dmtu c.i.f.

There was little or no low-grade manganese ore business transacted below $3.10, sources agreed.

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—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 silicomanganese futures prices have also helped to support manganese ore tags 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 said. “People are comfortable booking low-grade at either side of $3 when silicomanganese 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.”

Metal Bulletin’s high-grade manganese ore index c.i.f. 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 stabilizing.

Chinese alloy prices rise

The increase in low-grade ore tags has matched the rise in spot silicomanganese prices, as well as that for its futures market.

Chinese silicomanganese spot prices rose to 6,500 to 6,800 yuan per tonne March 17, up 18.8 percent from 5,400 to 5,800 yuan per tonne previously.

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

“The silicomanganese 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 silicomanganese on the futures market.

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

Smelters also continued lifting their offer prices amid pressure from 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 ferromanganese also increased to 5,500 to 5,700 yuan per tonne on March 17, up 4.7 percent from 5,200 to 5,500 yuan per tonne previously.

Meanwhile, silicomanganese 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 to 5 rupees per kilogram,” one Indian source told Metal Bulletin on March 17.

Prices leaped to $945 to $985 per tonne on a f.o.b. India basis, up from $920 to $960 f.o.b. 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
Meanwhile, silicomanganese in Europe was boosted slightly by the tight availability of spot material.

Prices inched up at the top end to €1,000 to €1,120 per tonne on March 17, up 1 percent from €1,000 to €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.

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

But similarly to silicomanganese, 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 ferromanganese,” a European trader said to Metal Bulletin.

“We have limited spot material available,” a producer said, adding that 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 (second-quarter) prices. Talk is around €1,000 to €1,020 for (the second quarter),” he said.

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.

U.S. alloy markets remain static
U.S. manganese alloy prices have largely held flat as spot market activity has stalled, while the remaining second-quarter negotiations have been finalized.

U.S. spot prices for high-carbon ferromanganese remained unchanged at $1,400 to $1,475 per gross ton on March 16, according to 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 U.S. Defense Logistics Agency’s (DLA’s) Strategic Materials division, in anticipation of a potential sale that could relieve some of the tightness in the U.S. market.

The DLA last week announced that it will hold a sale on March 21 for 15,000 tons of high-carbon ferromanganese.

That sale may help alleviate supply-side concerns, potentially driving prices downward.

U.S. silicomanganese prices slipped slightly to 65 to 68 cents per pound on March 16, down 1 cent on the low end from 66 to 68 cents per pound previously.

While the market has been affected by the threat of cheaper inbound material, the recent reversal in low-grade ore and silicomanganese 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 silicomanganese supplier source told AMM. “The market had been expected to crash downward in time, but this reversal may prevent the expected precipitous fall.”

Rena Gu, Singapore, Janie Davies and Fleur Ritzema, both in London, contributed to this report.

Chris Kavanagh

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