Shipping woes, delays intensify for EU Mn flake buyers

European manganese flake buyers have been met with rising offers this week and worsening logistical challenges, with cancellations becoming more common and some vessels redirected owing to European port congestion.

Delays and rising costs have become commonplace for European buyers since January, as cancellations and limited container availability have caused freight rates to jump. And conditions appear to be worsening amid congestion at some European port terminals. Several traders have been informed by shipping operators that incoming manganese flake will be stuck at port for five days before loading, while one trader said the shipping line they were working with had offered to unload on to barges, which would cause another four weeks of delays before being containerised.

Others told Argus that their imports have been redirected away from Rotterdam to avoid congestion, and instead delivered to alternative ports such as Zeebrugge and Amsterdam — which in turn adds further delays as material then needs to be trucked to Rotterdam for storage in warehouses.

These mounting logistical challenges — in addition to reduced Chinese production — are encouraging flake sellers to keep testing the European market with higher prompt offers, ranging yesterday from $3,900/t du Rotterdam to over $4,000/t du Rotterdam in some cases. Argus assessed prices for 99.7pc flake at $3,700-3,800/t du Rotterdam yesterday, up from $3,550-3,650/t at the start of July.

"The Europe price is even higher now because shipment is no longer the standard four weeks, but more like 100 days," one trader said. Another added that they were now facing a four-week delay for flake shipments — thwarting some prior expectations that arrivals might finally become a bit smoother in August after several months of delays and cancellations.

Rotterdam prices realign with China

European flake prices have held an unusually high premium to fob China prices for several months now, as rising freight costs and supply concerns caused the spread to balloon out. But values appear to be returning to parity, with fob China prices currently at $3,370-3,420/t which equates to around $3,800/t cif Rotterdam once a $400/t freight cost is factored in — roughly in line with the top end of Argus' 27 July European assessment of $3,700-3,800/t du Rotterdam.

Last week, Chinese traders offered material to Europe at around $3,500/t cif Rotterdam, but prices this week are converging at higher levels with a European trader purchasing 300t at $3,800/t on 27 July — albeit spot trade and deals are sparse in Europe at the moment.

China's recent price hikes have been striking given how stagnant the market was in the second quarter and in July. In May, the fob China index held firm at $2,500-2,550/t fob China for three weeks, while prices in Europe rose by 13.5pc. But fob China prices have now increased by 33pc from $2,525-2,575/t fob on 3 June.

By Yusuf Khan