SHANGHAI, Apr. 1 (SMM) –

Review:
Unlike in the past, the MB Hong Kong Conference failed to give a lift to spot manganese ore prices. Market players generally believe that steel producers will lower bid price by RMB 50-150/mt in April, but SMM’s surveys found that the price decline may be smaller than expected. Trading activities at ports were thin since suppliers and buyers had a big disagreement over prices. Sell-off has not yet been reported, though, as traders still have sufficient capital at the moment.

Prices:
In the Port of Tianjin, the mainstream traded price for Australian manganese ore (Mn48%, lump) was RMB 47.5/mtu; RMB 40.5/mtu for South African mixed carbonate manganese ore (Mn38%, lump), and RMB 39.5/mtu for South African high-iron manganese ore (Mn35-36%, Fe18%). In Southern ports, the mainstream traded price for Australian manganese ore (Mn48%, lump) was RMB 45.5/mtu; RMB 38.5/mtu for South African high-iron manganese ore (Mn35-36%, Fe20%); RMB 39-39.5/mtu for South African mixed carbonate manganese ore (Mn38%, lump), and RMB 45.5/mtu for Australian high-silicon manganese ore (Mn36%, Si20%). 

Inventories:
Inventories at Chinese ports were 2.75 million mt last week, with 1.2 million mt in the Port of Tianjin, down 30,000 mt on a weekly basis, and 850,000 mt in the Port of Qinzhou, also down 50,000 mt from the previous week. South China will enter rainy season in mid-to-late April, but markets remain cautious largely because of mounting manganese ore inventories at Chinese ports. Should steel mills push for even lower manganese alloy prices, demand for manganese ore will be curtailed as a result, putting further downward pressure on manganese ore prices.

Steel Markets:
According to the annual reports of twelve Chinese listed steel companies, five companies reported huge losses in 2012, totaling RMB 13.85 billion. Angang Steel lost RMB 4.16 billion, Magang Group lost RMB 3.86 billion, Anyang Iron & Steel Group lost RMB 3.49 billion, and SGIS Songshan lost RMB 1.9 billion. Most steel & iron producers were plagued by growing inventories, decreasing working capital and shrinking gross profit margins. Global steel market remained weak last month, with the CRU Steel Price Index down 0.7% MoM in late March. 

Overseas Markets:
South African state-owned transport and logistics company, Transnet SOC Ltd and China Development Bank, announced March 26 a ground-breaking agreement as Transnet continues to diversify funding sources for its capital investment program. Last year, Transnet announced an unprecedented R300 billion investment program, the Market Demand Strategy, to revamp and expand its ports, rail and pipelines infrastructure and equipment.

Forecast:
Markets are not quite optimistic over outlook for manganese ore markets, but the upcoming rainy season in south China and Chinese Tomb-Sweeping Day will help manganese ore prices remain at current low levels this week.