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Global manganese market still inactive and oversupply

Global manganese market still inactive and oversupply

market insights

December 06, 2019

By the end of the year, the situation in the global market for manganese remains weak. According to the market outlook of insiders, the situation will improve only by the end of Q1.

Among the key factors influencing now the situation in the global manganese market are the following:

  • Being unsure about further steel industry performance and citing on high stocks, manganese alloys pro-ducers in China grant discounts for end-users and refrain from replenishing Mn ore stocks.
  • Meanwhile, the amount of raw material stocked in the Chinese ports has hit new record.
  • Global Mn ore suppliers reduce the supply volume for next month.
  • Leading European manganese alloys producers in Europe have cut output

Steel production output in China decreased

In late November, prices for SiMn in China went down by 1-2%, to $730-755/t EXW amid poor demand from end-users. Market insiders report that there is plenty of alloy stocked by producers, whereas the consumption perspective looks foggy. Over January-October, crude steel output in China has increased by 7,5% YoY, to 828,330 Mt, according to the last data of World Steel Association. However, daily output in October totaled 2.69 Mt, down 5% MoM (it was only for the third month this year when daily production declined) and down 1% YoY. Moreover, last month, daily crude steel production in China was 10% lower than this year record, achieved in June at the level of 2.9 Mt.

Steel production forecast

Industrial analysts predict, that the annual steel production in China will reach approximately 990 Mt this year, up 8% YoY. Nonetheless, due to uncertainty with local steel demand in winter, over the next couple of months the output is going to decline. Additional pressure will be provided by national holidays in January-February. That is why the Chinese market players agree that the tender prices for manganese alloys will go down during December and January purchasing rounds.

Oversupply has caused a drastic drop of global Mn ore prices

Poor demand for manganese alloys is impacting the market of Mn ore globally. Despite temporal demand revival, prices for manganese ore in Chinese ports declined in November, whereas its volume on port stocks reached a new long-year record, soaring to 4.5-4.7 mln. t. This amount is more than twice as much higher than the average estimated monthly consumption in China. Regardless the fact that the significant part of these stocks is frozen by banks providing financing to traders, oversupply has caused a drastic drop of global Mn ore prices. South African, Australian, Brazilian and Gabonese suppliers have decreased their offers for November shipments by 15%.

Trying to prevent the further price decrease and save at least current margin, which is minimal over last 4 years, global Mn ore suppliers have started to cut supply. South32, the biggest producer in the world, has cut the volume offered for China in December by 50%, according to the local market sources.

European manganese alloy markets

Manganese alloy markets in Europe remain quiet, and prices are more or less stable since September. Modest steel demand forecast and uncertainty in German automotive industry make ferroalloy consumers avoid the purchasing increase as well as signing long-term contracts, being more and more focused on spot. During low season of Christmas and New Year holidays, additional support for manganese alloy prices in Europe will be provided by decreased supply. FerroGlobe, one of the biggest producer in the region, has suspended the operations in its plants in Spain 6 weeks ago. In the middle of November, it has became known that Ukrainian Nikopol and Zaporozhye Ferroalloy plants will halve output because of unfavorable market conditions.

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