SMM Manganese Ore Weekly Price Review and Forecast (13-17 May, 2013)

SHANGHAI, May 13, (SMM) –

Review:
Domestic manganese ore markets remained sluggish last week. Manganese alloy producers also suffered as steel mills lowered bid prices for manganese alloy. Steel supply has been increasing steadily, but downstream demand has shown no notable improvement. Market optimism over future steel prices is growing after Baosteel lowered ex-works prices for most categories of steel products for June. Market players believe steel producers will continue to cut bid prices for ferroalloy in June.

Prices:
In the Port of Tianjin, the mainstream traded price for Australian manganese ore (Mn48%, lump) was RMB 46.5-47/mtu; RMB 39/mtu for South African mixed carbonate manganese ore (Mn38%, lump), and RMB 38.5-39/mtu for South African high-iron manganese ore (Mn35-36%, Fe18%). In southern ports, the mainstream quotations for Australian manganese ore (Mn48%, lump) were RMB 45-45.5/mtu. Mainstream traded prices were RMB 38.5/mtu for South African high-iron manganese ore (Mn35-36%, Fe20%); RMB 38.5-39/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 ports were 2.4 million mt last week, with 1.1 million mt in the Port of Tianjin, up 30,000 mt on a weekly basis, and 850,000 mt in the Port of Qinzhou, also up 50,000 mt from the previous week. SMM understands that the slight rise in manganese ore port inventories will put little downward pressure on manganese ore prices given the cost support. Faltering demand and pressure for lower input costs from manganese alloy producers are the major reasons behind the depressed manganese ore prices at ports.

Steel Market:
Baosteel lowered the ex-works prices of hot-rolled steel for June by RMB 180/mt. It also lowered the ex-works prices for pickling steel at its headquarters and Shanghai Meishan Iron & Steel by RMB 100/mt and RMB 150/mt, respectively. It cut ex-works prices for galvanizing steel at Shanghai Meishan Iron & Steel by RMB 160/mt. Baosteel also lowered ex-works prices for electrogalvanizing CQ steel, galvanized aluminum-zinc steel and non-oriented electrical steel by RMB 150/mt. Weak steel prices have sent iron ore and coking coal prices down as well. Steel prices should remain under downward pressure for the immediate term.  

Overseas News:
CML reported 2.97 million mt in manganese ore output during 2012 in its annual report, of which 2.94 million mt was sold, down 15.3% YoY. Its operating revenues for the entire year of 2012 also fell 21.6% YoY to USD 554 million. Plagued by global economic crisis, ERAMET’s operating revenues in the first quarter this year fell 9% YoY to EUR 797 million. However, it registered significant growth in revenues from manganese for three reasons. First, carbon steel output from China and India rose 9% QoQ and 4% QoQ, respectively. Second, manganese ore CIF prices to China increased 18% YoY. Third, its output of manganese ore and manganese sinter increased 82% YoY to 860,000 mt in 1Q.    

Forecast:
Imported manganese ore prices at ports should remain weak this week, but have little chances of falling sharply for the near term.