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Manganese ore market review in March and forecast of the future market

 

April 1st, 2010
The market of manganese in March is bad, but later this month is good. Because affected by drought, limited profit and many other factors, manganese alloy factories in the North and South have not maximized the release of the demand for manganese. But as the wet season is approaching and the stocked manganese ore is growingly consumed, though the exchange quantities have not been kept up, the inquiry frequency has increased than the previous month. With the rise of the price of iron ore, steel, manganese and manganese-alloy, manganese ore price is more likely to rise later this month. Alloy factories’ purchasing demand has been recovering. So, later this month, manganese ore market will rebound, and the port quotes and port exchange quantities all will have an obvious increase.
 
Ⅰ March Review
1. The price rise obviously
After the Spring Festival, the north manufactures are starting to produce. The stock of manganese ore are slowly used up. The South was affected seriously by drought, and due to this, the factory operating rate can not be improved quickly. With the approach of the busy period, many manufacturers also plan to prepare enough materials to meet the post-production. Therefore, the amount of manganese market inquiry has increased, and the port price offered by miners also rises a little.
With the approach of steel purchasing in April, alloy manufacturers offer a higher alloy-price later this month. Compared to the price of the early month, Silicon manganese 6517# increased about 300-400 RMB / ton. Port manganese price will have an obvious increase later this month. Currently, the price of Australian manganese Mn45% in South port has reached to 62 RMB/ton unit which has an increase of 5RMB/ ton unit compared to the former price 56-57 RMB/ton unit, and the price of Australian manganese Mn45% in Brazil South port has reached to 61-62RMB/ton unit; the price of Australian manganese Mn45% in North port has reached to 65-66RMB/ton unit, and the price of Australian lump ore has reached to 66RMB/ton unit.
 
2. Transactions have been improved.
Despite the limited profit and the weak acceptance of high price manganese ore, alloy factories mainly purchase small-volumes. However, the overall demand in March is more than February. As the iron ore and steel prices have risen, the manganese ore will rise too. Take Qinzhou port for example. Because the exchange quantities are small, the Qinzhou stocks have been at the 730,000-750,000 million tons. Close to the date of the release, the stocks now are about 630,000 tons. The daily volume is about 10,000tons since late this month.
On the other hand, although manufacturers purchase-volumes are still small and the stock of manganese ore are still large, the main port of both South and North are selling goods slowly.
 
3. The buy-price is stably rising.
Since the average exchange quantities of domestic manganese ore early this month are not very good, and the stock-consumption rate is slow, most of the foreign manufactures are slowing down the pace of buy-price increase. And most of them remain the early quotation. But late this month, China's domestic market is increasingly active, and the price of manganese alloy and steel are rising. So the buy-price offered by port manufactures is slowly rising. Currently, the price of Australia Mn45% has reached to 8.0-8.1 dollars / ton unit (CIF) from7.8-7.9 dollars / ton unit (CIF); and the Brazil Mn45% price has reached to 7.8-7.9 dollars / ton unit; the Indonesia Mn53% price has reached to 6.9-7.1 dollars / ton unit.
 
Ⅱ April Forecast
1. Iron ore price is soaring
Although negotiation on iron ore price has not yet finalized, but the "China price" situation we have looked forward to for many years is still out of reach. There is no suspense of the result that China has to passively accept the requirement of spot pricing made by the Big Three, and the price of iron ore will increase more than 90%. And because the rise of the iron ore, the manganese ore price will definitely rise.
 
2. The buy-price will probably rise.
Foreign miners are mostly optimistic about the China later market. On the concluded Hong Kong Alloy Conference, miners have the same attitude on the increase of the price. Some miners gave Australia Mn45% a price of 8.5 dollars / ton unit, and gave Zambia Mn53% a price of 9.0 dollars / ton unit (CIF). At present, China manufactures can not accept such a price, and China government has strengthened regulation on the real estate market. Besides these, foreign suppliers confidence on the Chinese market has not been affected. And they expect that there is large room for the manganese ore buy-price to rise.
 
3. Alloy has a higher price
Since later this month, domestic manganese alloy market has run a high-profile operation. The South Si-Mn 6517# price is 8200-8400(including factory tax), and the North Si-Mn 6517# price is 8400-8600 RMB/ ton unit(including factory tax) which has an increase of 300-400 RMB/ ton unit compared to February price. Many alloy factories place heavy expectations on the future market. Although some factories’ April purchase prices have not yet come out, but there is no question that the price trend in April is up. And the rising alloy price will further promote the manganese price.
 
4. Drought in the South is gradually ease, and the wet period is approaching
Although the drought situation in the South is severe, the Meteorological Department forecast that such situation will be eased the turn in the season of April and May. Besides that, the wet period in South is approaching. So opened manganese alloy enterprises will gradually increase based on the current situation, and they will have a high demand of manganese ore.
In a word, the forecasting market of manganese is good, and both the exchange quantities and the exchange price will probably enter a new stage based on the March condition. However, recently deformed steel bar futures shocked down at a big margin of 0.73%. China steel companies have not accepted BHP Billiton's short-term iron ore contract. But a long association mechanism will collapse and the fluctuation risk of iron ore price will increase. Domestic mortgage loan has been obviously tightened which caused the blocked situation of deformed steel bar futures. Therefore, the professionals think that the rising price of manganese is passive rather than active, and they hold cautious attitude to the market.
 
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