SHANGHAI, May 31 (SMM) - The prices of manganese ore experienced modest ups and downs throughout May, with SiMn alloy market being suppressed by the pandemic, evidenced by poor terminal demand. SMM will take a detailed look into the SiMn alloy and manganese markets through the supply and demand.
Manganese ore market:
Supply: The port inventory of manganese ore dropped significantly in May, down about 740,000 mt MoM mainly because the actual arrivals have declined palpably. The main decrease was contributed by South Africa ore, while the shipments from Gabon and Ghana rose.
Demand: News of production restrictions in the manganese alloy market was frequently heard since mid-May, with an actual reduction of around 40% across some manufacturers. In addition, the remaining manufacturers mainly purchased on demand amid fluctuating ore prices.
Prices: The variability in ore prices was more outstanding. The monthly average price of Australia lump remained at $62/mt, basically unchanged from the previous month; the monthly average price of Gabon ore was $56/mt, down 7% from the previous month; the monthly average price of South Africa semi-carbonate was $40/mt, up 3% from the previous month. As a result of the continued high prices of Australia lump, mills increased the proportion of semi-carbonate and Gabon ore. The overall price of the Australia lump was subject to its scarcity and concentration of mineral rights. Gabon ore arrived in large quantities, most of them were still low-priced ones in consideration of the shipping cycle, so the prices of Gabon ore dropped slightly in the month. Later, with the consumption of low-priced ore, Gabon ore prices ushered in a slight increase.
Market prospect: SMM believes that the overall ore prices will remain firm. On the one hand, the terminal demand may be released with improving pandemic situation. On the other hand, with the arrival of high-priced overseas ores and the depletion of low-priced sources, ore prices will remain high, and traders will also hold firm the prices.
SiMn alloy market:
Raw materials: Coking coal and coke prices continued to fall in the month. As of the end of the month, secondary metallurgical coke prices have dropped for four consecutive rounds and stood at 2,750 yuan/mt, equalling to a cost reduction of 400 yuan/mt for SiMn alloy. In addition, as manganese ore prices rebounded after a slight fall, the cost changed little as a whole.
Demand: Affected by the pandemic, the terminal demand was weak with poor shipments in north and south China. Therefore, manufacturers in the north mostly reduced the production, while those in south changed their focus from 6517# alloy to 6014# alloy.
Prices: SiMn alloy prices dropped in May. By the end of the month, the spot prices were mainly 8,150-8,300 yuan/m and 8,150-8,350 yuan/mt (both in cash, ex-factory) respectively in north and south China. The manufacturers scheduled the production based on the orders on hand with few spot transactions. There were goods being sold at 8,000 yuan/mt in the north, and the manufacturers were mostly pessimistic.
Market prospect: SMM believes that, although it is relatively bullish on the macro front, the consumption side stays weak. And the market shall watch the purchase prices disclosed by mainstream steel mills. If the purchase prices are lower than expected, SiMn alloy prices will rebound as the manufacturers would chose the further reduce the production. But if the prices are favourable and the demand is moderate, SiMn alloy manufacturers are likely to maintain the current operating rates, and the overall market situation will change little compared with May.
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