SHANGHAI, Dec 28 (SMM) - In 2022, China's high-purity manganese sulphate market deviated from the boom in 2021 as prices and profits both gradually returned to rationality. The annual average spot price of high-purity manganese sulphate hovered around 6,500 yuan/mt. The highest prices of the year were concentrated in January-March, averaging at about 10,408 yuan/mt. As of December 27, the average market price of high-purity manganese sulphate stood at 6,475 yuan/mt, down 5,475 yuan/mt or 54.75% on the year.
Overview of high purity manganese sulphate prices in 2022
In the first half of 2022, the output of high-purity manganese sulphate increased by 37% month-on-month in March, while the output of precursors only rose slightly, thus the overall supply was relatively plentiful. In April, as the domestic COVID-19 pandemic continued, the reduced production of precursors weighed on the demand for high-purity manganese sulphate, who prices dropped constantly. Since then, the oversupply emerged in the high-purity manganese sulphate market, which improved slightly in May. In June, precursors with high nickel content started to receive more popularity. As a result, the demand for manganese was lower than expected, slowing down the destocking of high-purity manganese sulphate. Eventually, the upward momentum of high-purity manganese sulphate prices was insufficient. At the end of June, the spot prices of high-purity manganese sulphate stood at 7,493 yuan/mt.
When the second half of the year began, the high-purity manganese sulphate market was still in a downturn in July-August. The unsolved accumulation of stocks continued to pressure prices. Fortunately, the precursor output saw a significant increase since September when the demand for new energy vehicles peaked and car makers were in a rush to install batteries. At the same time, the rising nickel sulphate prices also improved the cost efficiency of the 5 and 6-series precursors, whose growth rate was rather rapid. Therefore, the demand for high-purity manganese sulphate was lifted, accelerating its destocking. However, supply shortage did not occur as the existing production capacity of high-purity manganese sulphate was sufficient, hence the upward room for market transaction prices was still limited. Moreover, the good times did not last long. The terminal demand from the new energy sectors shrank from November to December, and battery factories and ternary cathode companies were generally pessimistic about the market outlook. Therefore, the corresponding precursor factories resorted to production cuts and destocking while taking a cautious approach to purchasing high-purity manganese sulphate. In contrast, high-purity manganese sulphate companies mostly reduced the production to support the prices, so the high-purity manganese sulphate market was in a stalemate. As of December 27, the average spot price of high-purity manganese sulphate stood at 6,475 yuan/mt, and the price index was 6,341 yuan/mt.
Profits and costs
From the first quarter of 2022, the profits of high-purity manganese sulphate producers have been on the wane. The annual profit margin is mostly concentrated at 5%-6%. In the first half of the year, the prices of raw materials including manganese ore, sulphuric acid, and imported coal rose continuously, and the prices of auxiliary materials such as liquid caustic soda also added simultaneously. Therefore, the overall costs of manganese sulphate enterprises were relatively high in the first half of the year. In the second half of the year, the prices of manganese ore and sulphuric acid began to fall, but the spot transaction prices of high-purity manganese sulphate also showed a downward trend. As such, the profits were not comparable to those in the last year, which suggested that the overall profits already dropped to a normal level.
Market outlook
2022 is coming to an end, and the sluggish price of high-purity manganese sulphate has become an undeniable fact, with its profit returning to rationality. In the future, there will be more new high-purity manganese sulphate capacity on the supply side. If the sodium battery and LMFP sectors could thrive, then high-purity manganese sulphate prices will enjoy a solid support.
