Output cuts to bolster China manganese prices

Chinese manganese prices are likely to continue to rise in the near term because of planned production cuts at key smelters and higher tender prices paid by stainless steelmakers, market participants said.

A push by the country's largest manganese producer Ningxia Tianyuan for higher prices, and output cuts agreed by the main producers in south China, may further support sentiment.

Ningxia Tianyuan this week increased its tender price to 16,500 yuan/t ex-works from Yn15,900/t ex-works on 4 January.

Key producers in the manganese industry, led by Ningxia Tianyuan, agreed at a 9 January meeting to carry out a 60-day output suspension with mutual supervision this year to support prices, according to market participants. The producers have also promised to suspend output for most of February by conducting equipment maintenance, after typically halting operations for only two weeks previously. Wuling Manganese stopped its 200 t/d flake output last week, with restart dates undisclosed.

South Korean steelmaker Posco's tender price for a supplementary purchase of 2,000t manganese flake rose to $2,443-2,463/t cif South Korean ports for January delivery, up from $1,999/t from a tender it issued in mid-December. The firm secured only 2,000t of flake, although it had planned to buy 2,622t, as many producers withheld material from sales on expectations of higher prices in the near term.

Domestic stainless steelmaker Baosteel lifted its tender price for 4,000t of flake to Yn15,000/t on a delivered basis and paid by acceptance bill at the start of January , up by Yn3,800/t from a tender it issued in early December. Tisco also lifted its tender price for 2,500t of flake to Yn14,800/t on a delivered basis, paid half by acceptance bill and half by cash, up by Yn3,700/t from a tender it issued in early December. Xinsteel this week raised its tender price for 1,200t of manganese lump 97pc grade to Yn16,800/t on a delivered basis and paid by acceptance bill, up by Yn5,200/t from a tender it issued in mid-December.

Prices for manganese flake have risen by 52.8pc since the start of December when Ningxia Tianyuan began to restock material from the spot market to push up prices. The range for 99.7pc grade flake increased by 16.6pc from the start of January to Yn16,100-16,300/t ($2,488-2,519/t) ex-works today, with some market participants predicting prices may hit Yn16,500/t or Yn17,000/t next week.