Battle Line For Sales Of Manganese Ore To China Becomes Abnormal...

Battle Line For Sales Of Manganese Ore To China Becomes Abnormal
= Spot Price Of Mn-Ore Has Risen To US$4.00 Per Mn 1% CIF, Anxiety For Shipments Of Ghanaian Ore
Spot price of manganese ore for China has risen steeply. It seems that the contract on high grade manganese ore ( with Mn 46 - 48% ) has been concluded at a higher price of US$4.00 per Mn 1% CIF China. The origin of this manganese ore is said as Australian ore.

The normal level of price for high grade manganese ore contracted with Chinese customers for shipments in April - June quarter of 2007 is in the range of US$3.70 - 3.80 CIF but these prices have risen to a considerable extent in comparison with US$2.80 - 3.00 CIF settled for shipments in January - March quarter of 2007.

On the other hand, Ghana has sold 584,000 tons of manganese ores for shipments to China in 2007 but an anxiety for shipments from Ghana has emerged. The buyer concerned said that Privat, having acquired the new ownership of manganese mine in Ghana ( Ghana Manganese Company ), notified the parties concerned to cancel the existing contracts. Therefore, the transitions to be seen hereafter are marked and a possibility to reduce the quantity of manganese ore to be exported from Ghana to China is not deniable, because Nikopol Ferro-Alloy Works of Ukraine, under management of Privat, is a major buyer of Ghanaian manganese ore ( imported 830,000 tons from Ghana in 2006 ).

The matter in question is that China imported 6,212,000 tons of manganese ore in 2006, which had a remarkable increase of 35% compared with that ( 4,580,000 tons ) imported in 2005. The averaged unit price of manganese ore imported into China in 2006 was US$104 per ton CIF as fallen from that ( US$149 ) in 2005. The reason, why the unit price of manganese ore imported into China in 2005 had risen to a nearer level to US$150 per ton CIF, was due to an aftereffect of the contracts concluded at a higher price than US$5.00 per Mn 1% CIF in 2004, when transactions to import manganese ore became a boom.

There is a strong possibility to materialize again an era of manganese ore in 2007 as recorded in 2004 to 2005. Namely, a tight supply of manganese ore is anticipated. As regards the world output of manganese ore in 2006, the production of high grade ore increased by 5% from that in 2005 but that of medium and low grade ores had a considerable decrease from that in 2005. Consequently, the total quantity of manganese ores produced in the world for 2006 came to 11.8 million tons ( on Mn content base ), having increased by only 2% compared to that for 2005. However, the world demand for manganese ore in 2006 increased by 4% from that in 2005 and this expansion of the demand complied with the world output of crude steel in 2006, which came to 1,314 million tons as increased by 3% compared to that in 2005.
As for the quantities of manganese ferro-alloys produced in the world for 2006, the production of silico-manganese increased by 17% and that of ferro-manganese also increased by 4 - 9% in comparison with those for 2005 and, in view of the matter which the world production of crude steel in 2007 is expected to continue a further expansion on a basic tone, the world demand for manganese is still in the direction to enlarge further. Therefore, the world demand for manganese ore in 2007 is anticipated to increase accordingly. On the other hand, by taking into account of price of US$5 per Mn 1% for manganese ore, the production of manganese ore in 2007 is supposed to turn to increase ( mainly to resume operations at idled manganese mines and to challenge again sales for exports ) but there is a big probability to arise a mismatch between supply and demand,

China is the country to face straightly a gap between decreasing supply and increasing demand. China produced 420 million tons of crude steel in 2006, having increased by 65 million tons from that in 2005, but is supposed to increase further their production of crude steel in 2007 by 50 - 60 million tons. Therefore, China will require more than 7 million tons per annum of manganese ore in 2007. The domestic production of manganese ore in China once reached a peak in 2005 but, after that, has inclined to decrease and the official data reported that the domestic production of manganese ore in 2006 had a decrease of 8% compared with that in 2005. Even the domestic production of manganese ore in China has arisen with a decline.

The quantity of manganese ore required by China in 2006 had an increase of approximately 20% on Mn content base but the demand for manganese ore from European countries and the USA in 2006 had a considerable decrease of more than 20%. Accordingly, an increase of the demand in China was offset by a decrease of the demand in the western countries and a margin to maintain a balance still existed. In addition, the accumulated stocks of manganese ore at wharfs ( supposedly more than one million tons ) caused by an excessive quantity of this ore imported into China in 2005 had functioned as a buffer for the sharply increased demand for manganese ore.

The price of manganese ore for China had still weakened in the first half of 2006 and that of medium grade ore ( including siliceous ore ) had been depressed to a level of US$2.20 - 2.30 per Mn 1% CIF China. In addition, ocean freight has risen steeply and, consequently, net price of manganese ore received by manganese mines was a loss for them. As a matter of fact, medium-class manganese mines in Australia suffered from a loss in their settlement of accounts for the first half of 2006.

When the supply and demand of manganese ore on a long run are looked over, the projects to increase production and to develop new mines are scarce. The projects to increase production of manganese ore have been restricted to the followings ; <> BHP Billiton's mine in Australia ( to increase from 3.20 million tons / year at present to 4.20 million tons / year in 2009 ), <> Eramet's mine in Gabon ( to produce 3.50 million tons / year in 2008 by an increase of 500,000 tons / year from that in 2006 ), <> Ghana Manganese Company's mine in Ghana ( to increase by 200,000 - 300,000 tons / year to 1.80 million tons / year in 2007 by means of improving the facilities at loading port ) and <> Local mine of northern territory in Australia launched to produce from autumn of 2006 ( on a scale of 500,000 tons / year ).

When price of manganese ore enters into an era of US$5 per Mn 1%, the Buritirama mine of Brazil ( to produce 500,000 - 600,000 tons / year ), having had once disappeared from the supply side in 2005 to 2006, has a possibility to resume the production but the quantity of manganese ore to be supplied by this Brazilian mine has been limited.

On the other hand, in order to cope with the difficulties to secure manganese ore, the Central Government of China is very likely to start out to control exports of manganese ferro-alloys from China and has already adopted from April of 2007 the system to set up floor prices for exports of manganese ferro-alloys in line with the regulations.
last modified : Tue 08 May, 2007 [11:05