MSTC-Karnataka conducted a manganese ore auction on behalf of Sandur Mines on 20 Jul’21, as per reports. About 16,632 t of different grades of ore was booked by 10 participants at a price 7.58% higher than the set base price at the auction. Sandur had increased the base price by 12% for Mn 30-32% grade material compared with the previous auction on 25 Jun. The reasons behind the price hike were:
- State-owned merchant miner, MOIL, had increased prices by 7.5% in Jul as against the previous month.
- Indian manganese alloys prices are still ruling on the higher side.
Indian manganese ore imports rose by over 77% to 2.73 million tonnes (mn t) in Jan-Jun’21 (H1) against 1.54 mn t recorded in the same period last year. South Africa was the largest exporter to India, at almost 1.50 mn t.
Factors that drove up manganese ore imports
The fate of the ferro alloy industry is intrinsically linked to that of the steel industry. In CY’20, the first wave of Covid and strict lockdown had reduced steel consumption to nil, which had also dragged down manganese alloys demand. There were also supply issues from South Africa which too was in the throes of Covid.
- However, in H1CY’21, manganese alloys prices started scaling news highs, which encouraged several producers of other ferro alloys to migrate to manufacturing manganese alloys since it offered very lucrative margins at such high prices.
- Also, there were supply issues in the international markets that supported increased demand from India. Supply disruptions from Ukraine, which traditionally supplies to Europe, led to India catering to Europe. Malaysia too faltered in terms of supplies, because of strict lockdown. This led to South East Asia and Japan, which are serviced by Malaysia, sourcing from India as well, at very high prices. Consequently, because of higher demand for manganese alloys, demand for manganese ore increased.
- Imports were also aided by the fact that there was not much change in the domestic supply of manganese ore. Traditionally, domestic production of manganese ore is around 2.5 mn t, with imports at similar levels. However, the H1CY’21 import trend is an aberration, SteelMint observes.
Indian steel demand is expected to recover post-monsoon. Consequently, domestic demand for manganese alloys is also expected to rise in tandem.
Secondly, demand from the export markets may also stay buoyant with the implementation of the Russian export tax which will create a case for the Russians to exit the export market from Aug’21. The markets vacated by Russia can be catered to by Indian smelters.
Thirdly, a possible export duty from China could further open up markets for India.
Therefore, above factors may support higher manganese alloys supplies from India, which can further boost manganese ore imports.
India is the largest and cheapest supplier of manganese alloys globally.
Prices as on 9:00 IST, 21 Jul. d-o-d changes indicated against closing price of 20 July
As per sources, Tshipi and South Africa-based UMK have both reduced semi-carbonate manganese ore offers for Mn 36.5% and Mn 36% respectively by $4.70/dmtu CNF China for Aug’21 shipments – down by $0.20/dmtu compared with July shipments. The reasons behind the reduction in prices are:
- Some participants predict slower crude steel production in Jul and Aug.
- South African manganese ore production and shipments are regaining momentum.
- Miners expect dull demand for medium- and low-grade ore in the coming months.
As per customs data, Brazil’s manganese ore exports totalled 192,817 t in Jun’21, up by 44.8% m-o-m. In Q2 CY’21, exports increased by 10.89% q-o-q to 591,911 t against 533,801 t in Q1 CY’21.
- China remained the leading importer with 125,411 t followed by Uruguay with 38,869 t of imports in Jun.
- The average FoB prices for Jun exports were around $139/t.
- Silico manganese exports declined by 41.14% m-o-m in Jun compared to May.
South Africa, the world’s largest producer of manganese ore, recorded production volumes of 15.79 mn t of the material in CY2020, down 2.95% y-o-y against 16.27 mn t in CY2019. South Africa has the largest manganese reserves in the world and accounts for nearly 33.5% of the total global manganese ore production.
According to customs data accessed by SteelMint, South African manganese ore exports declined to 1.597 mn t in May’21, down by 20.7% against 2.015 mn t in April. The decrease in exports is mainly due to reduced buying from China and South Korea. However, export volumes rose by 39.3% y-o-y in the Jan-May’21 period compared with the same period in 2020.
Major manganese miner South 32 has increased manganese ore offers for Australian- and South African-origin ore for Aug ’21, as per latest reports. Australian block of Mn 45% is being offered at $5.5/dmtu, up $0.22/dmtu, while South African semi-carbonate ore is being offered at $4.9/dmtu, up $ 0.13/dmtu. The hike in ore prices can be attributed to increased freight costs in the global market.
State-run manganese ore miner MOIL has revised prices for Q2 FY’22, as per SteelMint reports. Prices for ferro grade and silico manganese grade ore have been increased by 7.5%. The increase can be attributed to rising manganese ore import prices on higher silico manganese prices in the global market, SteelMint notes.
MSTC-Karnataka conducted an e-auction for 10,080 t of different grades of manganese ore (Mn 28-34%) on behalf of Sandur Mines (SMIORE) on 25 Jun’21. In all, 13 bidders participated in the auction, and the entire quantity was booked at 21.49% above the floor price. The base price for the auction for Mn30-32% material was 6.25% higher compared to the previous auction, given the rise in manganese alloys prices.
As per customs data, imports of manganese ore into China increased by 27% m-o-m to 28.54 mn t in May’21. Imports increased 25.2% y-o-y for the Jan-May’21 period. Increased prices along with firm demand for silicomanganese resulting from a hike in steel production have triggered imports of manganese ore. As per World Steel Association data, China produced 99.5 mn t of crude steel in May’21 up by 7% m-o-m.