SMM4, March 29: recently, Eramet released its results for the first quarter of 2020, which showed that manganese, which accounts for about 46 percent of the group's total sales, fell 17 percent to 359 million euros in the first quarter of 2020. The decline in selling prices (- 41 per cent) was partly offset by an increase in sales (29 per cent for manganese and 3 per cent for alloys).
Global production of carbon steel, the main export of manganese, fell slightly in the first quarter of 2020 to 447 million tons, down 0.8 per cent from the first quarter of 2019 (2.7 per cent compared with the fourth quarter of 2019). Despite the pandemic, Chinese production, which accounts for 52 per cent of global production, is still growing (+ 1.4 per cent).
This led to an increase in steel stocks in China and began to decline at the end of the first quarter. As for the rest of the world, steel production affected by the downturn in the auto industry slowed (- 3.1 per cent), while the opposite was true in each region (7.2 per cent in Europe, 5.3 per cent in India and 4.0 per cent in North America).
Compared with the first quarter of 2019, manganese ore consumption fell by 3.8% and ore production by 4.1%. This means that the balance between supply and demand is still slightly excess. As of March 31, inventories at Chinese ports had increased slightly to 5.8 tons, equivalent to about 10 weeks of consumption, including 1.1 million tons of ore in bonded warehouses that had not been previously calculated.
CIF China's 44 per cent manganese ore market prices fell significantly in the first quarter (with an average price of $4.40 / dry tonnage) compared with the same period last year ($6.60 / dry tonnage, down 33.8 per cent). However, prices rebounded (up 7.8 per cent) compared with the last quarter of 2019 ($4.0 / dry tonnage). The fall in Eramet prices was also more pronounced, with Eramet sales in January and February based on lower spot prices in December 2019.
In the overall market environment, the overall health situation has been adversely affected by the sharp slowdown in steel production in Europe, which has been exacerbated by the health crisis. as a result, the market prices of the first major silicon alloys in Europe fell by 6 per cent (silicon manganese) and 10 per cent (ferromanganese). However, they rebounded slightly in the last quarter of 2019 (3.7% for silicomanganese and 3.2% for refined iron and manganese).
In Gabon, manganese production in Comilog again reached a quarterly record level of about 1.3 million tons (up 28 per cent from the first quarter of 2019). Manganese ore transport has also increased by 25 per cent as a result of improved logistics performance. During this period, external sales increased significantly, to about 1 million tons (an increase of 29 per cent).
Manganese alloy production increased to 196 kilotons, an increase of 3 percent over the first quarter of 2019 (an increase of 20 percent over the fourth quarter of 2019), reflecting the nominal production level of the Group's factories, driven by sales of standard products. Alloy sales also increased by 3%.
Since the epidemic spread around the world, steel production has been severely affected, and Western producers have announced large-scale production cuts, which will put pressure on demand for manganese ore and alloys. With regard to the supply of ores and alloys some producing countries have also been forced to stop or significantly restrict their mining or metallurgical industry activities. This applies to South Africa, which accounts for about 40 per cent of global ore production (seaborne). However, the duration of such restrictions remains uncertain.
Against a backdrop of unstable supply and reduced demand, the change in manganese ore prices remains uncertain: the market observed a significant increase in the average market price in mid-April, exceeding $5.50 / dry tonnage.
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