Chinese manganese prices, which are at a 14-year high, are expected by market participants to continue their uptrend in the coming week with tighter spot availability caused by output cuts and higher tender prices paid by stainless steel producers.
Prices for 99.7pc grade flake have risen by 5.22pc this week to 30,000-30,500 yuan/t ($4,630-4,707/t) ex-works today, the highest level since June 2007 and up by 24.75pc since the start of this month. Export prices rose to $4,800-4,900/t fob China today, up by 29.3pc from early August.
Supplies remain tight as most producers have been reducing output to stabilise prices in line with a reduction plan initiated by the manganese industry alliance led by China's largest smelter Ningxia Tianyuan. The alliance will hold a meeting in mid-September, which will be attended by key producers. Most smelters are operating at low run rates, with some having suspended output to carry out maintenance because of environmental checks or electricity supply curbs.
Few new production projects will be approved in the future and many smaller, outdated smelters will be phased out given China's goal of reaching carbon neutrality by 2060. Some smaller smelters in the main production hub of the "manganese triangle area" with a combined capacity accounts for 10pc of China's total of around 2mn t/yr, will be shut down by the end of this year because of environmental restrictions.
China's manganese output is forecast to fall by 30,000t to 70,000-80,000t in August, according to market participants.
Higher tender prices paid by key stainless steel producers have also supported the metals market. Key stainless steel producer Baosteel today bought thousands of tonnes of flake at Yn31,100/t on a delivered basis and paid by acceptance bill, up by Yn9,050/t from a tender it issued at the end of July.
Many producers have continued to suspend offer prices this week on expectations of higher prices in the near future, with several suppliers today offering at Yn31,000/t ex-works or even Yn32,000/t ex-works.
