SMM Manganese Ore Weekly Price Review and Forecast (13-14 Jun. 2013)

SHANGHAI, Jun. 9 (SMM) –

Review:
Traded volumes of imported manganese ore at ports were sluggish as manganese alloy producers did not build up stocks in large amounts ahead of the Chinese Dragon Boat Festival. The Port of Tianjin and Qinzhou saw appreciable increases in arrivals of shipments, but the volumes of goods traded were low, putting downward pressure on manganese ore prices.

Prices:
In the Port of Tianjin, the mainstream traded price for Australian manganese ore (Mn48%, lump) was RMB 45-45.5/mtu; RMB 38/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 44-44.5/mtu. Mainstream traded prices were RMB 38.5-39/mtu for South African high-iron manganese ore (Mn35-36%, Fe20%); RMB 37.5-38/mtu for South African mixed carbonate manganese ore (Mn38%, lump), and RMB 42.5/mtu for Australian high-silicon manganese ore (Mn36%, Si20%).

Inventories:
Inventories at ports were 2.55 million mt this past week, with 1.3 million mt in the Port of Tianjin, up 15,000 mt on a weekly basis, and 1 million mt in the Port of Qinzhou, also 100,000 mt over the previous week. Port inventories are growing due to large arrivals and tepid demand downstream, weighing on manganese ore prices. Sell-off at lows has not yet been reported, though.

Iron Ore:
According to data from Mysteel, as of May 31, 2013, Indian iron ore fines (Fe62%) at ports averaged USD 815/mt, USD 837.86/mt for PB iron ore fines (Fe62%), and USD 884.38/mt for Brazilian crude iron one fines(Fe63.5%), down 11.70%, 12.46%, and 9%, respectively from early May. This was a plunge from April. As a consequence, some steel mills including Jiangsu Shagang Group have begun to resell iron ore for arbitrage. Iron ore supply is now in surplus, with prices expected to fall throughout June.  

Overseas News:
On June 4, Cao Huiquan, Chairman of Hunan Valin Iron & Steel met over 500 employees in FMG Group’s headquarters, Perth and paid a visit to Pilbara iron ore mine site. Many Chinese enterprises, especially steel producers such as Baosteel, Anshan Iron & Steel Group, Hebei Iron & Steel Group and Tianjin Materials and Equipments Group Corporation are setting their sights on iron ore in Australia. FMG is now trying to raise funds because it may go bankrupt if it is unable to pay off USD 12 billion of debt before June 30.  

Forecast:
Despite a RMB 50-100/mt rise in bid prices of manganese alloy for June by steel producers, operating rates at alloy producers failed to increase significantly. Instead, operating rates contracted some. However, alloy producers who closed for maintenance earlier will progressively resume operations following the three-day Chinese holiday, which will lift manganese ore prices slightly.