Manganese supply tightens in China

Manganese price has been down to around RMB11,000-11,500/t (USD1,608-1,681/t) ex works in domestic market. Sources reported to Asian Metal that as demand from downstream stainless steel mills keeps weak, manganese price moves down all the way but it seems to reach the bottom line. However, as more smelters halted production, manganese supply is tightening. Participants claimed that some smelters start to be reluctant to sell with no profits at all and wait for the market to go stable.
A Hunan-based trader who just purchased 120t of manganese flakes reported that manganese supply in the spot market is not so sufficient after so many smelters cut down production. "As the price falls significantly, the smelters can not maintain any profits and have to halt production," said the source who expects the market supply to keep sliding in the coming weeks. "Even if the demand stays weak, we are sure manganese smelters would try to raise their offers to make some profits."
The source believes that the smelters who have no manganese mines have already been bearing losses after the price dropped to below RMB14,000/t (USD2,047/t) ex works early the month. "The rational price for manganese flakes should be around RMB12,000-12,500/t (USD1,754-1,827/t) ex works currently as the production costs still need time to decrease as well."
The source thinks that some suppliers are getting rid of their stocks at hand and thus push the price much lower day by day. "When these suppliers go out of the market, manganese price would go stable soon as the supply would be tightening up then. At least, the smelters need some profits to keep their business running."
Another Hunan-based smelter running at one third of the capacity of around 20,000tpy told Asian Metal that they can only rely on long-term contracts to keep the production. "Demand is so low that we hardly make any deals for the moment though the price is much low at around RMB11,500/t (USD1,681/t) ex works." The source believes that almost 70% of the production capacity in China is invalid for the moment as most smelters can not maintain any profits at the low price in a range of RMB11,000-12,000/t (USD1,681-1,754/t) ex works.
The source thinks some downstream consumers are still in need of the material though they halted production of steels. "Especially in this fourth quarter, more consumers would cut down production in face of the dull market and dampening financial condition. However, after this round of sell off, manganese price might soon go stable or even rebound slightly according to the demand in the coming two months."
Some traders are reportedly interested in replenishing some stocks at current low prices. Moreover, the provinces in South China would enter the dry season, which might increase the power price and add to the manganese production costs. That might not be a dream for manganese price to go up then.