MethodologyContact usLogin
Prices for seaborne high-grade manganese ore have plunged in October 2024, with producers announcing cuts to production and exports amid poor levels of purchasing in China
But the most recent price drop was merely the latest dramatic move in a period of increased volatility, following the suspension of operations at South32’s Groote Eylandt Mining Co (GEMCO) manganese ore facilities in Australia.
Eight months on from the suspension in March, market participants say that the price’s soaring then plummeting, and the shifting global demand patterns that followed, were driven by an unexpected downturn in Chinese steel demand, which put a damper on the consumption of manganese ore and mitigated the GEMCO supply deficit, as well as there being an initial “panic” over an expected tightening of supply.
“[The price volatility] was caused by two things,” a producer source said. “First, buyers panicking that there wasn’t going to be enough high-grade material, and second, the world under-estimating how weak Chinese steel demand would be in the second half of the year. The combination of those two things has caused this massive oversupply that we now have to deal with.”
The state of demand in China was highlighted by recent news that high-grade producer Eramet was suspending ore production at its mine in Gabon, and South Africa’s United Manganese of Kalahari (UMK) announcing that it will limit exports and pause all road transport operations.
In a statement on October 17, Eramet said that the current manganese ore market oversupply was the result of a reduction in purchases by Chinese buyers, a sudden increase in the supply of semi-carbonate ore, and soaring prices from April to mid-August.
Fastmarkets’ assessment of manganese ore stocks at Qinzhou and Tianjin ports were in the range of 6.29-6.48 million tonnes on Monday October 14, with the volumes reaching this year’s peak level so far, even higher than 5.02-5.18 million tonnes on March 11, before the suspension of GEMCO.
“Arrivals of manganese ore [shipments] before and during the Golden Week holiday [in China, October 1-7] were around 1.4 million tonnes, compared with normal bookings from smelters,” one manganese ore buyer contact said. “So there was a jump in stocks, especially at Tianjin port.”
According to a port contact, South African manganese ore stocks at Tianjin were 3.38 million tonnes on October 11, up by 5.2% on a weekly basis; Gabonese manganese ore stocks were 1.0 million tonnes, up by 7.2% on a weekly basis; Australian manganese ore stocks were 400,000 tonnes, down by 3.5% week on week; and Brazilian manganese ore stocks were 160,000 tonnes, almost unchanged.
Market sources said that despite GEMCO’s suspended supply, poor demand was leaving stock levels high.
A second producer source said that it was difficult to pinpoint the exact reasons why stock levels were still elevated, but noted that, along with weaker demand, stocks may be being held at port rather than being transported directly to factories on a ‘just-in-time’ basis, because high stocks at port do not necessarily mean high stocks at factories.
A third sell-side source added that it had seen in recent months a large purchasing push into the market for lower low-grade material from South Africa.
The source said that the exact proportion of lower low-grade material in stocks was hard to ascertain, but that the reason why stocks were at such high levels “needs to be considered.”
The high-grade manganese ore market has been on a price roller-coaster ride since the GEMCO manganese ore facilities in Australia were hit by Cyclone Megan in March.
The news precipitated initial “panic” over an expected tightening of supply, followed by huge price rises, with Fastmarkets’ weekly manganese ore high-grade index, cif Tianjin, peaking at $9.01 per dmtu in mid-July.
Since then, global demand patterns have shifted, and prices have plummeted again, driven by an unexpected downturn in Chinese steel demand, which put a damper on the consumption of manganese ore.
Fastmarkets’ latest weekly calculation of its manganese ore high-grade index, cif Tianjin, ticked upward slightly to $3.91 per dmtu on October 18, from $3.91 per dmtu on October 11.
But the calculation on October 11 marked a 20.37% decline from October 4, the largest decline since August 16, when the calculation dropped by 32.89% to $6.02 per dmtu, from $8.97 per dmtu on August 9.
Saleable production in South32’s 60% share of GEMCO had decreased by 1.221 million tonnes year on year in August, to 2.32 million tonnes, according to the company’s 2024 financial report published in the same month.
But despite that a sizable chunk of high-grade supply was still missing from the market, prices began to nose-dive, with drops of $2.95 per dmtu in August, $1.06 per dmtu in September and $1.00 per dmtu in October.
Market sources said that a key factor in the high-grade manganese ore price movements since March was a significant weakening in Chinese long steel demand, driven by struggles in the real estate sector and reductions in infrastructure investment.
Sluggish demand for manganese ore mitigated the effect of the supply disruptions, trade sources told Fastmarkets.
Prices fell on the lower ore demand amid a declining alloy market, with traders and smelters already securing ample stocks of the raw material, “because when prices were increasing [from April to August] buyers were trying to purchase more,” a second producer source said.
“Now smelters have enough material,” the same source added, “and because they were not willing to buy, producers had to reduce their prices [significantly] – and now they are offering a price which is very low.”
The downward trajectory, along with a weak alloy market in China and high port stocks of manganese ore, resulted in prices as low as $3.91 per dmtu on October 11, down by 56.6% from the peak level.
This was the lowest price for high-grade ore reported by Fastmarkets since 2019.
Similarly, prices of semi-carbonate manganese ore rose first and then fell, but with the peak one month earlier than that for high-grade manganese ore.
Fastmarkets’ weekly manganese ore semi-carbonate index, 36.5% Mn, cif Tianjin, was calculated at $3.70 per dmtu on October 18, down by 42.3% compared with $6.41 per dmtu on June 7, and even lower than the $4.00 per dmtu on March 15.
In addition to the huge changes in each manganese ore price index, there were big changes in the price spread between high-grade manganese ore and lower-grade materials.
The biggest spread after the suspension of the GEMCO facility was $4.83 per dmtu on August 9, when the high-grade manganese ore index was $8.97 per dmtu while the semi-carbonate manganese ore index was $4.14 per dmtu.
The smallest spread was $0.22 per dmtu on October 11, compared with $0.33 per dmtu on March 15.
“The high-grade manganese ore price is attractive now, compared with lower-grade materials,” one Chinese buyer contact said on October 11, “so trading volumes have increased in the seaborne market.”
Increased price volatility in China’s manganese ore markets, after the GEMCO suspension, followed a period of relative stability from late 2023 to April 2024.
Higher manganese ore prices, after GEMCO’s suspension, pushed up global manganese alloy prices, but the alloy markets turned weak after June, due to sluggish demand during the western summer lull season in Europe and Asia, according to market sources.
But while manganese alloy prices did eventually react to the GEMCO news, jumping by as much as 25% in India and 16% in Europe in early May, there was a lag between the suspension and the effect on prices.
The market responded to the GEMCO situation when South32 announced on April 21 that operations and sales could remain offline until January-March 2025.
Fastmarkets’ weekly price assessment for silico-manganese 65% Mn min, max 17% Si, in-whs China, was 5,800-5,900 yuan per tonne on March 15, rose to a year-to-date peak of 8,200-8,400 yuan per tonne on May 31, and most recently was 5,800-6,000 yuan per tonne on October 18.
Manganese alloy prices jumped sharply in India and in Europe in April and May, in response to soaring manganese ore prices, and then started to cool off on subdued demand.
Fastmarkets’ price assessment for silico-manganese 65% Mn min, min 16% Si, fob India, reached a year-to-date peak of $1,200-1,250 per tonne on June 14, but fell to $900-940 per tonne on October 18, where it had been on March 15.
Fastmarkets’ price assessment for silico-manganese, lumpy, 65-75% Mn, basis 15-19% Si (scale pro rata), major European destinations, was €1,305-1,420 ($1,407-1,531) per tonne on May 10, compared with €1,140-1,210 per tonne on March 15.
It was €960-1,020 per tonne on October 18.
The manganese alloy market in the US was mostly stable following the suspension of GEMCO operations, but then rose in May on higher manganese ore costs.
Fastmarkets’ weekly price assessment for silico-manganese 65% Mn min, min 16% Si, in-whs Pittsburgh, US, was on a general uptrend from 58-60 US cents per lb on April 25 to 67-70 US cents per lb on June 13.
In the wake of the outage of GEMCO’s materials in the seaborne market, global manganese ore demand patterns shifted, with buyers tackling the disruption by adjusting blends, according to market sources.
Manganese alloy smelters in Asia tried to find substitutes for manganese ore, to adjust ore blending, or even switched to producing other ferro-alloy products without the manganese element, when prices were continuously on the rise or when insufficient high-grade manganese ore was available, according to market participants.
The reduction in high-grade manganese ore consumption began soon after GEMCO suspended its operations in April, when alternative options such as processing rich manganese slag became cost-effective, due to rising manganese ore prices.
Port stocks of manganese ore in China dropped quickly, with panic restocking during the price uptrend, according to market sources.
Fastmarkets’ assessments of manganese ore stocks at Qinzhou and Tianjin ports were down to 4.24-4.29 million tonnes on June 24.
The demand for manganese ore in the seaborne market changed again on price declines, with smelters considering increasing their use of high-grade manganese ore in blends by adjusting ore mixes and reducing the input of rich manganese slag and sintered lump, according to market sources.
The GEMCO supply suspension also led to some shifts in global manganese ore demand patterns, with producers noting new inquiries from Asia and Oceania in April.
But market sources added that the dramatic reduction in Chinese domestic steel consumption led to increased steel exports, which in turn affected these patterns most notably over the past eight months.
Cheaper Chinese steel imports have flooded into alternative Asian markets, as well as into Europe, market sources said, displacing steel production and leading to a dramatic drop in demand for manganese alloys in those regions.
“That is the focal point that has changed [in recent months], It’s that shift of Chinese demand,” the first producer source said. “Chinese steel producers having to focus their attention on Chinese steel exports rather than Chinese domestic demand, and that has a ripple effect on everything else.”
On October 20, South32 said that its operational recovery plan for GEMCO was continuing, including a substantial dewatering program and a phased mining restart during the September 2024 quarter, along with continued investment in repairs to the mine and infrastructure.
“We remain on track to resume production from the primary concentrator during the December 2024 quarter,” the company said in its September 2024 quarterly report.
South32 was targeting production of 1 million tonnes for its 2025 financial year.
“Subject to maintaining construction productivity during the upcoming wet season,” it said, “sales volumes are expected to progressively increase [until] the June 2025 quarter.”