Market Sentiment on European EMM Market

SHANGHAI, May 17 -- Manganese flake prices fell by USD 40/mt in Europe this week as demand remained low amid cautious sentiment, market participants told MB.

Current traded prices were between USD 2,830-2,930/mt, down from USD 2,870-2,950/mt on May 7 when prices fell from USD 2,875-2,975/mt. "The bearish forecast about the European economy and people being cautious about Greece. The Chinese steel industry is not doing so well and the price seems to be cooling," a trader told MB.

Most business was concluded at USD 2,850/mt with volumes ranging from 25-100 mt, but there were rumors of much lower prices. "The prices are going down; demand is low. The lowest offer I've heard is USD 2,820/mt, but I wonder if this is enough. There might even be prices below USD 2,800/mt but I can't verify this," a second trader told MB.

But prices could soon to recover from the dip, according to a third trader, as manganese ore prices remain strong and electricity prices increase in China. "Electricity prices are going up in China, which could stop it going down further, or even push it up," the trader told MB. "Low sales have been due to a currency game. People were selling cheap material because they were hedged against the euro," he added. Prices last climbed on April 16 following a fatal accident at China's Fengyun Manganese Co, which led to the loss of 6,000 mt of output. Before the incident, prices had been trading at USD 2,825-2,975/mt since March 26.

"There's a shortage of water and the whole of China is relying on hydropower. Also, the environmental crackdowns have caused production problems and manganese ore prices are going up," the first trader told MB. "So the price should go up. Once confidence is back and the exchange rate settles down, it will go up," he added.

(Edited by SMM)