Manganese market in shambles
2005-05-27 09:15:58 【Print】
BEIJING (Asian Metal) 27 May 2005 – With international manganese markets in decline, the Chinese manganese market stands on its last leg.
The manganese alloy market has been in decline for nearly six months, while the manganese metal and ore markets have dropped since late February.
Impacted by sluggish international SiMn and FeMn markets, Chinese Mn alloy suppliers have struggled to stay afloat in the harsh export market.
With SiMn prices down to USD570/t in the U.S., and EURO520-560/t in Europe, Chinese offers are less competitive, despite lowering offers to USD630-650/t FOB.
Industry insiders in South China point out that current prices have touched bottom. With rising production costs, domestic smelters can no longer afford production.
Some market participants predict, however, that Chinese SiMn prices will have to drop below USD600/t in order to compete internationally. Chinese FeMn suppliers face a similar situation.
“The price gap between USD580/gt and USD2,000/gt is quite large,” explained a trader, referring to the U.S. HC FeMn market. “High prices and profits attracted many smelters last year to manganese production. So the boom in supply has led to heavy price decreases.”
Some major smelters have begun to reduce output in order to stabilize the international prices. Nikopol, Ukraine’s major Mn smelter, has decided to reduce SiMn and FeMn by 10-15%.
Many Chinese Mn alloy smelters have shut down because of the unprofitable market. Langfang Xinda Ferroalloy, the second largest FeMn smelter in China has halted completely.
Furthermore, the Chinese government has imposed restrictions on ferroalloy exports by abolishing SiMn and FeMn export rebates in January, and limiting Mn ore tolling since mid-May, with possible export duties soon to be imposed.
Meanwhile, the Mn metal market has softened, with prices down from USD1,540-1,580/t FOB in mid-February to USD1,500-1,540/t.
Under the situation, the Mn ore market has worsened, with spot prices down from RMB2,000-2,200/t ex ports in March, to RMB1,700/t ex ports for high quality Mn ore 45%min.
A major Mn ore supplier who sticks to RMB44/mtu now holds more than 100,000t of Mn ore in ports. Most small traders have given up the business temporarily.
However, domestic Mn ore prices haven’t slid so much. "Prices haven’t increased as high as imported ores," said a trader in South China, "so there isn’t much room for price decreases." At present, Chinese domestic low-grade Mn ores sell at RMB18-22/mtu, down from RMB22-26/mtu.
Market observers indicate that Mn ore prices will continue to decrease in the Chinese market. “The prices should reach a level that suppliers and consumers can accept,” said an observer.
