EU Mn alloy market diverges amid supply shifts

Manganese alloy prices are diverging in Europe, with ferro-manganese pushing higher this week while the silico-manganese market comes under pressure from increased supply.

High carbon ferro-manganese prices were assessed today at €1,800-1,850/t ($2,036-2,092/t) ddp with trader offers rising to €1,900/t — up from €1,750-1,800/t ddp a month ago and their highest level since November 2008 amid the financial crash. Meanwhile, silico-manganese prices were assessed today at €1,750-1,800/t ddp, with offers slipping towards €1,700/t ddp for delivery in the first quarter — down from €1,875-1,925/t ddp a month ago.

The two alloys tend to move in tandem with price indications often registered at similar levels. But a recent uptick in regional silico-manganese supply — in part thanks to increased imports from India — has caused the underlying fundamentals to diverge, and the impact is being borne out in the prompt spot market.

And even lower offers for first quarter shipments underscore widespread expectations that prices will soften further. This week, European traders received silico-manganese offers at $1,500/t fob India — putting prices at around $1,800/t on a cif basis or just shy of €1,600/t. Even once duties, delivery and warehousing costs are factored in, prices for that material stand significantly below today's prompt spot market, with traders offering that incoming material to their customers at below €1,700/t in-warehouse Rotterdam.

"They [traders] know the price will go down further hence the reduced offers," one buyer said. "If you do not have to cover for material then it is better to wait as [prices] will keep going down," they added.

By contrast, regional ferro-manganese continues to tighten after several months of low imports, largely because Covid-19 outbreaks have hampered production in South Africa and Malaysia. Supply tightness has been exacerbated by local challenges, as soaring energy costs have lately forced several European producers to operate at reduced rates. Spanish, Ukrainian and Slovakian producers have been severely impacted for some time now, with Ferroglobe last week confirming multiple smelter suspensions across its plants in Spain.

Prices for medium carbon ferro-manganese are also holding firm at record highs, with Argus' assessment currently at €3,650-3,750/t ddp — up from around €1,270/t a year ago. Tight supply has played a part, as has this year's surge in manganese metal prices that has caused some mills to switch to medium and low-carbon alloy in their melts. Manganese flake prices in Rotterdam are up by 227pc since the start of this year at €7,100-7,300/t duty unpaid, while medium carbon prices have risen by 180pc.

That said, while supply is tight, spot demand has been low in recent weeks with most end-users satisfied via long-term contracts. Those end-users dipping into the spot market recently have mostly been doing so to make up for any delayed shipments or if an uptick in their operating rates necessitates a bit more alloy to cover immediate requirements.

By Yusuf Khan

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