Manganese prices soar as supply shrinks on environmental concerns

SHANGHAI, Jul 4 (SMM) – Manganese prices soared in the second quarter of 2018 as domestic supplies shrank and as production recovered slower than expected on environmental concerns, SMM believed.

In negotiations as of Wednesday July 4, spot prices surged to 17,000 yuan/mt ex-works in cash, SMM learned. SMM assessed manganese in major Chinese markets at 16,400-16,600 yuan/mt ex-works in cash on July 4. This rose 1,850 yuan/mt from June 29, and gained 5,250 yuan/mt from April 17, when prices began to climb. 

Purchasing prices of manganese across domestic large steel mills grew bullish sentiment in the market. Shanghai Baosteel settled its July purchasing price in a tender at 15,500 yuan/mt. This was up 1,300 yuan/mt from the tender for June, SMM learned.

Supplies from large producers were limited due to stricter environmental controls in major production areas. Traders with stock on hand refrained from selling at lower prices. 

While producers were eager to resume operation on high profits, they have struggled to obtain approval in regions under significant environmental pressure. In areas with relatively less environmental pressure, the limited size of mines made it difficult for local plants to expand production.

Though manganese prices have climbed to highs this year, some market participants maintained a neutral outlook as time is required for large plants to meet current supply shortfalls, SMM learned. However, some participants were cautious and mulled alternatives such as high-silicon silicomanganese. 

Due to environmental inspections, some 200,000 mt annual production capacity at a large plant In Ningxia remained suspended as of June 4. The capacity was scheduled to recover in late June. 

In Songtao county of Guizhou province, manganese producers are likely to resume production in early July after they failed to resume as scheduled in late June as inspections were incomplete. The local government shut all manganese plants and some parts of mines in Songtao on June 1 after pollution woes put the area under the spotlight.

Small manganese plants in Huayuan county of Hunan province shuttered last week with pressure from both environmental checks and short supplies of ore. All local manganese ore mines were suspended following a mine accident on May 13.

In Chongzuo, Baise of Guangxi province, production remained unaffected at large plants. But smaller plants cut output on shorter supplies of manganese ore, as supplies from local mines declined from environmental reviews.