Manganese prices soar as supply shrinks on environmental concerns
Manganese prices soared in the second quarter of 2018 as domestic suppliers shrank and as production recovered slower than expected on environmental concerns.
In negotiations as of Tuesday July 3rd, spot prices surged to 17,000CNY/MT ex-works in cash, manganese in major Chinese markets at 16,400-16,600CNY/MT ex-works in cash on July 3rd. This rose 1,850CNY/MT from June 29th, and gained 5,250CNY/MT from April 17th, when price began to climb.
Purchasing prices of manganese across domestic large steel mills grew bullish sentiment in the market. Shanghai Bao Steel settled its July purchasing price in a tender at 15,500CNY/MT. This was up 1,300CNY/MT from the tender for June.
Supplies from large producers were limited due to stricter environmental controls in major production areas. Traders with stock on hand refrained from selling at lower prices.
While producers were eager to resume operation on high profits, they have struggled to obtain approval in regions under significant environmental pressure. In areas with relatively less environment pressure, the limited size of mines made it difficult for local plants to expand production.
Though manganese prices have climbed to highs this year, some market participants maintained a neutral outlook as time is required for large plants to meet current supply shortfalls. However, some participants were cautious and mulled alternatives such as high-silicon silicomanganese.
Due to environmental inspections, some 200,000 MT annual production capacity at a large plant in Ningxia remained suspended as of June 3rd. The capacity was scheduled to recover in late June.
In Songtao county of Guizhou province, manganese producers are likely to resume production in early after they failed to resume as scheduled in late June as inspections were in complete. The local government shut all manganese plants and some parts of miners in Songtao on June 1st after pollution woes put the area under the spotlight.
Small manganese plants in Huayuan county of Hunan province shuttered last week with pressure from both environmental checks and short supplies of ore. All local manganese ore mines were suspended following a mine accident on May 13th.
In Chongzuo, Base of Guangxi province, production remained unaffected at large plants. But smaller plants cut output on shorter suppliers of manganese ore, as supplies from local mines declined from environment reviews.
