In 2019, the global ferroalloy industry had a very challenging year faced with overcapacities and intense competition. In China, an oversupply of manganese-based products has led to a sharp decline in manganese prices. For example, since the fourth quarter of 2019, China's silicon-manganese prices have fallen to 730-755 $/mt EXW. Moreover, as China's crude steel output stalled, ferroalloy inventories at Chinese ports soared to 4.5-4.7 million tons. According to industry insiders Chinese manganese manufacturers have accumulated a large inventory of finished goods and the consumption prospects are still unclear.
Over in Europe, manganese markets have remained calm since September 2019 and prices were relatively stable. Before the Christmas holiday off-season, in order to prevent market prices from falling further, global manganese alloy suppliers have begun to reduce supply. Ferroglobe, Europe’s largest manganese alloy producer, as well as the Ukrainian ferroalloy plants Nikopol and Zaporozhye, have responded by halving production since mid-November 2019. These cuts are providing support for the price of manganese alloys in Europe. Chinese companies can seize this opportunity to export to the EU.
So, what do Chinese producers have to do if they want to export manganese products to Europe?
Prerequisites for exporting ferroalloys to the EU
Since June 1st, 2007, the European Union has implemented the REACH regulation, which is the “Registration, Evaluation, Authorization and restriction of CHemicals”.
Which products need to be registered under REACH? REACH applies to all substances (essentially chemicals) and preparations (mixtures of chemicals) which are imported, manufactured or used in volumes of 1 ton per annum or more per producer or importer. Ferroalloys and metals are considered chemical substances. For example, ferromanganese importers require a REACH registration for manganese and iron.
Companies who intend to import manganese products into the EU need to be registered with the European Chemicals Agency (ECHA) to obtain a registration number. Non-EU producers can register through an Only Representative (for further information see here https://www.reach-advice.com/). However, this option is not available for Non-EU trading companies. The only option for them to obtain a REACH registration is to open an office in the European Union.
Furthermore, Chinese companies should be aware of export and import tariffs and factor these costs into their commercial offer calculations. China export and EU import tariffs for manganese products are shown in Table 1.
Table 1: China export and EU import tariffs (2019)
New Digital Sales Channel
Under a traditional sales and marketing model, most Chinese manganese manufacturers have very limited international reach. Some sellers search for overseas steel plants and buyers over the internet. However, it is very time-consuming, labor-intensive and carries a substantial amount of risk. Because the authenticity of the other party's identity cannot be guaranteed, trust is an issue and the success rate of cross-border transactions is relatively low. How and where to find reliable European buyers?
Introducing Metalshub, a professional digital marketplace for metals and ferroalloys. All companies who register must go through a series of identification checks in order to provide a safe and secure trading environment for everyone. It is free to register for Metalshub.
In a recent transaction, a famous manganese producer from Hunan province, China, offered 150 tons of manganese metal lump to a European steel mill over Metalshub. On the same day he won the deal due to the price and quality advantage of Chinese manganese products. By accepting the offer both parties reached a legally binding contract online and soon after they arranged the goods to be delivered in the same month. At the end of the transaction, both the buyer and the seller were very satisfied with the deal.
As manganese-based products such as manganese flakes, manganese lumps, manganese briquettes or ferromanganese are in high demand for steel plants and foundries in Europe, digital trading platforms, such as Metalshub, are an excellent sales channels for Chinese manganese producers and traders to find new buyers and develop their presence in the global market.
Founded in 2016, Metalshub is a pioneer in the digital revolution in the metals and ferroalloy trading. Committed to making the global ferroalloy and specialty metal market more efficient, Metalshub provides a B2B digital platform for metals and ferroalloys to promote a more efficient and more liquid physical market. The platform currently offers 17 product categories; boron, chromium, cobalt, copper, manganese, molybdenum, nickel, niobium, phosphorus, pig iron, recarburiser, silicon, sulphur, tin, titanium, tungsten, and vanadium, each with multiple subcategories. For more information, please visit www.metals-hub.com.