omh good news re manganese pricing

General Review Of Manganese Ore In 2007 And Its Outlook For New Year (1)
=China's Intention To Purchase Ore Stimulates Its Price, Manganese Mines Are Restricted To Increase Output=
The aggressive purchases of energy, minerals and metals by China have caused to have risen steeply prices of these commodities. It is also no doubt that a strong intention to purchase more manganese ore by China has stimulated price of manganese ore. However, even if China made every effort to purchase manganese ore as required, the total quantity of manganese ore purchased by China in the calendar year ( January - December ) of 2007 came to 6.00 million tons as a similar scale to that in the preceding year of 2006. In view of the expanded production of crude steel in China, the demand for manganese ore from China in 2007 was estimated at 7.00 million tons but the actual quantity of manganese ore purchased by China in the year had a shortage of 1.00 million tons. Consequently, the price of manganese ore purchased by China on the end of 2007 has risen by 3 times compared with that on the beginning of 2007.

The same case as that, price of manganese ore rose by 3 times, had emerged in the past years. Namely, during 3 years of 1988 to 1990, the price of manganese ore contracted by Japan to import had risen by 3 times. This affair is so-called " 3 times risen price of manganese ore ". This phenomenon was due to the fact that, although the world production of crude steel suddenly increased to a considerable extent, manganese mines in the western world decreased their production to cope with the depressed price of manganese ore and, accordingly, a gap between supply and demand of manganese ore had at once come up to the surface. However, a swell to rise price of manganese ore continued for 3 years, having resulted in a rise of 3 times.

However, in this time, price of manganese ore had risen by 3 times just for about one year. A causal sequence in 2007 was similar to that in the last case but the definite factor for 2007 was a strong growth of steel production in China. Also, the matter to consolidate capitals of major manganese mines as endeavored from 20 years ago has at last exhibited a power and this aspect has become a favorable wind for price of manganese ore. Furthermore, a storm of M&A in fashion howled frightfully. An Ukrainian Capital ( Privat ) has taken over in March of 2007 Ghana Manganese Company in Ghana and, following this takeover, an Eastern Capital has acquired on the end of 2007 Consolidated Minerals Ltd. of Western Australia. These acquisitions of manganese mines have come to the fact to give an tension not only to China but also to buyers of manganese ore in the western world.

The quarterly movements of price ( per Mn 1% on CIF base ) for medium grade manganese ore ( lumpy ore with Mn 44% ) contracted with Chinese importers for shipments in the calendar year of 2007 were as per the table attached hereto.

The world price of manganese ore had once risen steeply during a period of the end of 2003 to spring of 2004 but this case continued only for 6 to 10 months. After that, this sharp rise of price for manganese ore calmed down and the world price of manganese ore had been depressed during 2005 to 2006, because the overproduction of manganese ore caused to weaken its price. An evidence of this weakened market is that the price of high grade manganese ore ( lumpy ore with Mn 48% ) contracted with Japanese customers had fallen for shipments in the successive 2 fiscal years of 2006 and 2007. The movements of benchmark price ( on FOB base ) for high grade manganese ore ( Australian ore supplied by BHP Billiton to Japan) were <> for fiscal year of 2006 : US$3.00 per Mn 1% and <> for fiscal year of 2007 : US$2.70 per Mn 1%. The settlement of price for manganese ore in Japan follows that settled in the world and, therefore, particularly in view of a time-lag compared with the situation in China, a trend of price for manganese ore is understandable.

The price of manganese ore purchased by Chinese importers has risen to a considerable extent from shipments in the second half ( July - December ) of 2007, being multiplied by a feeling of crisis for purchase of raw material. The acquisitions of Ghana Manganese in Ghana and Consolidated Minerals in Western Australia by Ukrainian Capital as mentioned above have caused to soar price of manganese ore, as the sales of manganese ore by these two sources were destined mainly to China. According to the customs-statistics released in China, in the calendar year of 2006, 580,000 tons of Ghanaian manganese ore and 800,000 tons of Western Australian manganese ore were imported into China. These two manganese ores are important sources for China, having shared 20% of the whole import. However, as far as Ghanaian manganese ore is concerned, the outstanding contracts to be shipped in the end of 2006 and the beginning of 2007 to China had remained and, consequently, a certain quantity of Ghanaian manganese ore was able to keep as the imports into China in the first half of 2007. However, the import of manganese ore from Ghana into China in the second half of 2007 was nil and, since the purchase of manganese ore from Western Australia by China was settled in December of 2007, the matter in question has been carried over to 2008 but regular buyers of China have strongly felt a crisis of this problem. The reason is that Ukraine is the second largest country in the world to produce manganese ferro-alloys, following China as the world largest producer. A feeling of crisis is that it is unlikely for Ukraine to sell manganese ore at discounted prices to China as a rival to Ukraine.
last modified : Fri 25 Jan, 2008 [10:27]