China: Manganese Ore Prices in Free Fall; Heading to an Unknown Bottom
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In October, the price decline of Manganese ore accelerated, heading in a downward trajectory with virtually no brakes. The price decline of mainstream manganese ore in the spot market was generally by RMB 7.0 /dmtu (USD 0.99/dmtu), showing a decline of up to RMB10 /tonne so far. The number is on the rise with traders who took leverage in the transaction and now incapable of securing ownership of the cargo. The high-priced and non-circulating cargo at the port is also increasing. The sharp decline in spot leaves traders with little room to place large orders. Moreover, the weakening in the tender price of ferro alloy plants at the month-end comes with no help, resulting in sluggish transactions on Manganese ore.
1. Downstream market
1.1. Silicon Manganese: The market was weak in Sep and there is no improvement in Oct. After the national holiday, the market price of Silico Manganese has been on a downward track with no halt. There is a notable decline in all Silico Manganese specifications, ranging from RMB200-300 (USD 28.39-42.59) up to RMB600/MT (USD 85.18/MT). Regardless of the consistent decline, transactions were difficult to be made under sentiments pursuing upward trend, instead of the other way around. As the alloy plants struggled to stay afloat above costs because of frequent price adjustment on Manganese ore and hard born tender price for November, many have decided to reduce output to support price.
1.2. Ferro Manganese: the Ferro Manganese price in Oct continued its downward course of September. In Oct, the high-Mn alloy declined up to RMB500/MT (USD 70.98/MT) ,medium-Manganese dropped by RMB300 (USD 42.59) while low-Mn slipped by RMB100/MT (USD14.20/MT).
2. Downstream operation
2.1. Silico Manganese operational rate and output
According to the statistics, the Silico Manganese output in Oct is 1,099,300 MT, down 44,500MT from that of last month. The Silico Manganese (65-17) output, as per incomplete survey, is 970,000MT, down 30,000MT from that of month; There are 156 Silico Manganese plants operational, down 3 months on month; there are 356 operational furnaces, down 23 month on month. As the Silico Manganese kept weakening, many plants reduced output from mid-Oct under costs burden.
2.2. Figures on Ferro Manganese operation rate and output
In Oct, the operational rate of Ferro Manganese is 41.66%, up 5.93% from that of last month, with capacity utilization of 27.01%,up 5.38 month on month. The estimated output is about 213,500MT,up 32,000MT M-o-M. The increase in this month is mainly contributed by the gradual recovery of some stopped plants previously, shift from Silico Manganese production to high-Mn alloy by some plants and added capacity of 2*30000kVA smelting furnace, bumping its monthly output to 30,000MT.
Market wise, the ever increased supply and continued weak operation across-board of Mn products saw Ferro Manganese no exception. At present, the High Manganese #65 is at RMB6,000 (USD 852)or so and medium Mn 75C2.0 lingers around RMB7,700-7,800.
3. Manganese ore spot market
Decline and its frequency has aggravated. In October, the manganese ore spot market put on a show of relentless decline, with mainstream Manganese ore declining by RMB 7/dmtu, pushing the gap of weak spot and oversea offer to RMB 10/dmtu. Traders face double dilemma - short of capital to claim cargo in levered trading and a change from holding cargo to gradual sales. Non-mainstream cargo also registered a decline.
4. Manganese ore futures market
In November, it is clear that the manganese ore suppliers took long to release offer to China However, with the continuous decline of the upstream and downstream market and no sign of hitting a lull, the long-awaited offer comes with a dive, showing suppliers' mentality of keeping market share in China.
