Consumers Have Felt Anxiety For Violent Fluctuations Of Manganese Ore Price
It has passed two weeks, since a major manganese mine of Australia proposed regular consumers of China to reduce price of manganese ore by a shocking large extent (by 65%). Other major manganese mines, such as South African mines, followed this considerable reduction of price for manganese ore and also offered their price of manganese ore for Chinese customers accordingly to conclude concrete contracts. The negotiations with regular consumers in China on price of manganese ore were in dormant for nearly 6 months but suddenly started to import again manganese ore from overseas sources.
Also, the actual cargoes of manganese ore imported into China and stocked at warehouses in wharves of Tianjin and Zhanjiang Cities have suddenly become active from the beginning of February and the excessive stocks are decreasing. However, in consequence of that the price of medium grade manganese ore for regular consumers of China has been offered at US$5.50 – 5.65 per Mn 1% CIF, spot cargoes of manganese ore were once positively transacted at US$7 – 8 per Mn 1% until the middle of February but these prices have fallen to the levels offered for regular consumers.
There is a strong view in the market that, as price of manganese ore to import into China has fallen, market prices of manganese ferro-alloys produced in China will be depressed again. When Chinese producers are able to purchase medium grade manganese ore at US$5.50 – 5.65 per Mn 1% CIF, the cost to produce silico-manganese for export in China is estimated to be US$1,400 per metric ton. In view of the current market price for export of Chinese silico-manganese, this price of US$1,400 is thought to be profitable for the production.
The price of Chinese silico-manganese for export prevailed in the middle of February was on a level of US$1,400 – 1,450 per metric ton CIF Japan but, in accordance with a considerable fall of price for manganese ore to be imported into China as raw material, Chinese plants, which produce manganese ferro-alloys but have been shut down for the time being, are currently in the direction to resume its operations. Also, Indian silico-manganese has an advantage to be able to apply for preferential duty and, by means of utilizing this merit, is now being offered at US$1,100 per metric ton CIF Japan with a lower offer of US$1,000 CIF. India has now turned to the country to import manganese ore and, as far as raw material is concerned, India has taken the same stance as that of China.
Nevertheless, many cargoes of manganese ore stocked at Chinese producers have been purchased at higher prices (on a level of US$16 per Mn 1% CIF as contracted for shipments in July – September quarter of 2008) and, therefore, the cost to use raw material is unable to be reduced immediately. However, in anticipation of a reduction in cost for production, Chinese prices of manganese ferro-alloys are supposed to move.
On the other hand, part of manganese mines in Brazil and medium and small manganese mines in Malaysia, and so on are thought to have less power to be competitive for their cost on CIF China base. Therefore, these manganese mines will be inevitable to face a desperate battle on a long run. Some of Brazilian manganese mines have already declined to take place new negotiations at the stage, which price of manganese ore has fallen considerably.
A certain part of medium and small manganese mines has relied on the market of China for their sales of manganese ore but, from a long point of view, this business seems to have a possibility to taper in the near future. Also, there is an opinion in the market that even low or medium grade manganese ore newly developed and mined in Shishen -Kalahari area of South Africa will be involved in hard competition on sales of manganese ore for China.
This aspect means that only major manganese mines in Australia, South Africa, Gabon and Brazil are able to develop advantageously, and, from a long point of view, market price of manganese ore has been left with a factor to strengthen a sharp rise. Namely, it will become hopeless to stabilize price of manganese ore as raw material for a long period. On the contrary to an expectation from consumers, price of manganese ore is supposed to have a possibility to revert to a high volatility for the future.
For a reference, the price of manganese ore offered newly to Chinese side in this time is said by shippers' side to be applied to shipments in February – March but consumers' side has understood that this price as offered will be actually flowed into shipments in April – June quarter. Particularly, as a result of the reduced steel production, blast furnace mills and ferro-alloy producers in Japan have held a large quantity of manganese ore as stocked and, therefore, the negotiations with them on price of manganese ore for shipments in the fiscal year of 2009 (April 2009 to March 2010) are anticipated to be taken place with a long delay. – TEX Report
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