Core Consultants released its October Manganese Monthly Report. In it we note that while manganese stocks at Chinese ports as of the 19th of October were virtually unchanged from the previous month at 2.26m tonnes compared to 2.27m tonnes, when we compare this to the start of the third quarter, we note that overall stocks are a lot tighter. However, we do not expect this tightness to continue.
Chinese authorities gave the order in the middle of October for smelters to reduce output by 50% so as to curb pollution- however this is expected to be only temporary and has not yet impacted prices, but we caution that this scenario could lead to a buildup of stocks at the ports and an overall weaker outlook.
While spot market prices have declined nominally, traders are still insisting on higher prices, resulting in a decline in the number of transactions. Ore giants have actually done the opposite of what we expected and raised their offer prices not only in October, but again for November delivery. However, while it was “business as usual” in October, traders are struggling to close deals for November delivery and we therefore expect there to be some give. The exception being for 36% ore grade where the market is genuinely in short supply due to cut backs by UMK.
Looking at October offer prices, Camilog have increased prices of their Gabon lumpy grade 44-45% material by $0.01/dmtu, leaving their particle material prices unchanged at $6.2/dmtu. UMK’s 37% semi-carbonate material is at $5.65/dmtu for November delivery compared to October’s offer price of $5.15/dmtu. We expect that we may see a downward revision in offer prices during the first two weeks of November, especially as ferroalloy prices are declining.
With respect to steel markets, in the US, capacity utilization levels have improved following the implementation of trade barriers against Asian imports. The latest wave of anti-dumping measures is against several countries including South Africa, where import duties are between 2% and up to 147.6% depending on the origin and the product type. These measures were implemented at the request of four US steel producers following the success of similar measures which were taken against Belarus, Russia and the UAE.
Going forward we have lowered our price estimate for both SiMn and FeMn for November and December. The exception being for US 75% basis HC-FeMn materials which is showing signs of strength due to purchases ahead of the Christmas period.
