Are Indian manganese ore prices set for a correction in Dec?
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- Imported ore offers plunge on China factor
- Domestic ore production glut worries miners
- Dull exports demand further pressures prices
- Dull steel market dents manganese alloys sales
Morning Brief: India's domestic manganese ore prices experienced a decline in early November 2024, driven by price revisions from key miners.
India's leading manganese ore producer, MOIL, reduced prices of grades above Mn 44% by 7% and those below Mn44%, including SMGR and fines, by 1% m-o-m effective 1 November. On a m-o-m basis, however, MOIL's prices, which are the industry benchmark, dipped around 1% to INR 13,382/tonne ($158/t) in the current month compared to October's INR 13,517/t ($160/t).
It may be noted, MOIL's prices have fallen sharply since July's INR 21,000/tonne ($249/t). So far, September's levels were at their eight-month low of INR 12,874/t ($152/t).
Imported manganese ore offers hit 5-year low: High grade imported manganese ore prices to India are currently hovering at an over 5-year-low of $4.06-4.36/dmtu (for Mn grades of 44% and 46%). South African 37% lumps offers to India were at $3.96/dmtu, their lowest since end-February 2024 (8-month low). This may influence domestic prices downward.
Major miners cut prices amid depressed China demand: The fall in these offers were a function of the reduction in offers by leading global miners. South32 Ltd, a major global miner, reduced prices of 37% South African manganese ore lumps by $0.30/dmtu m-o-m to $3.70/dmtu CIF China for November 2024 sales. This adjustment was influenced by sluggish buyer interest and a significant decline in China's domestic spot market prices, which impacted overall market dynamics and expectations.
Eramet Comilog, a leading manganese ore exporter from Gabon, announced a price cut for November shipments. Prices of the Mn44.5% Gabonese lumps decreased by $1.05/dmtu m-o-m to $3.95/dmtu CIF China. Similarly, prices of the 43% Gabonese chips fell a significant $1.05/dmtu m-o-m to $3.75/dmtu CIF China. Again, lack of demand from China forced these price cuts. In fact, Eramet revised its 2024 production targets for manganese mining in Gabon to 6-6.5 mnt (against the previous 6.5-7 mnt) amid the drop in steel output in China.
Thus, BigMint feels, going into December, imported ore prices may stay depressed as Chinese fundamentals will not change, especially with the approach of deep winter, which in any case dents construction and steel demand. China is the largest consumer of imported manganese ore. This year, till October, it had imported almost 25 mnt. Naturally its own market dynamics have an influence on global ore prices.
Rise in Indian ore production: India's manganese ore production rose 17% m-o-m to 0.28 mnt in October 2024 against September's 0.24 mnt. The production glut amid lackluster finished steel demand may also exert a downward pressure on domestic prices.
Domestic manganese alloys prices at 10-month lows: India's manganese alloys prices fell by around INR 3,000/t ($36/t) m-o-m to their 10-month lows in November 2024 in India's key production hub for the same-Durgapur, Raipur and Vizag. Post-reduction, silico manganese prices fell to INR 65,300-66,000/t ($773-781/t) exw. Ferro manganese hovered at around INR 67,000/t ($793/t) exw (Raipur and Durgapur). As a result, smelters were forced to curtail output towards November-end to lower supplies amidst weakening demand.
Sandur Manganese and Iron Ores Limited's (SMIORE's) auction also felt this heat. At its auction on 20 November, only 35% of the 27,720 t of Mn 20-34% offered were sold. Notably, bids (weighted average) for most lots, comprising Mn28-30% (lumps), declined by 17% compared to the 6 November auction.
Alloys demand has declined amid sliding steel demand in India. The much-awaited post-Diwali rebound is still eluding.
Dull exports trend further pressures prices: India's manganese alloys exports were stable over January-October, 2024, rising a marginal 0.04 mnt to 1.50 mnt, which is adding further pressure on smelters. Nearly 45% of manganese alloys produced in India is exported. Limited demand from major buyers of the Indian material from the European Union, MENA and Japan have put prices under pressure.
Demand from MENA is down amid geopolitical tensions and economic uncertainty, forcing buyers to restrict buying.
Europe has yielded limited inquiries this year. The market here is still struggling amid power shortages and inflation due to the ongoing Russia -Ukraine war. These two countries offered power at the lowest tariffs to the EU region, but war has disrupted these dynamics. Japan, a major buyer from India, has reduced its crude steel production, limiting manganese alloys requirements.
Outlook
With imported manganese ore prices stabilising at a little under $4/dmtu (37% South African lumps) after hitting historically low levels, a reduction in domestic ore prices appears likely. This adjustment could be driven by domestic miners aligning their prices with global benchmarks. A drop in global ore prices may spur increased imports, which Indian miners would want to avert.
Thus, the market's near-term outlook suggests, domestic pricing will remain under pressure to maintain international parity across grades.
