SHANGHAI, Jul. 8 (SMM) –

Review:
Manganese ore prices at major domestic ports continued to slide last week, with South African mixed carbonate manganese ore leading losses. Instead of importing, some traders opted to buy imported manganese ore directly from ports. There is still room for manganese ore prices to fall further in the coming week.

Prices:
In the Port of Tianjin, the mainstream traded price for Australian manganese ore (Mn48%, lump) was RMB 44.5/mtu; RMB 36/mtu for South African mixed carbonate manganese ore (Mn38%, lump), and RMB 38/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 43/mtu. Mainstream traded prices were RMB 38/mtu for South African high-iron manganese ore (Mn35-36%, Fe20%); RMB 35-35.5/mtu for South African mixed carbonate manganese ore (Mn38%, lump), and RMB 40.5/mtu for Australian high-silicon manganese ore (Mn36%, Si20%).

Inventories:
Inventories at ports were 2.45 million mt last week, with 1.25 million mt in the Port of Tianjin, down 50,000 mt on a weekly basis, and 850,000 mt in the Port of Qinzhou, also 50,000 mt off the previous week. SMM believes port inventories will grow further as a large quantity of South African mixed carbonate manganese ore and manganese ore from Gabon and Australia will arrive in mid-July and since operating rates at alloy producers are low at the moment.

Steel Market:
Domestic steel prices rose appreciably last week. Prices of rebar futures and high-speed wire in electronic trading platform and billet extended gains. Prices in first-tier cities led gains. However, prices varied greatly from region to region. SMM believes three factors underlie the rising steel prices. First, tightening monetary policy by the People’s Bank of China pushed up borrowing costs of energy-intensive producers. Second, the Chinese government introduced more stringent environmental protection measures. Third, market speculation also contributed to the rising steel prices. Therefore, this wave of price rises may not be sustainable.   

Forecast: 
Given the high stockpiles at ports, a RMB 0.5/mtu decline is expected in manganese ore prices at ports in the coming week.