SunSirs: The Manganese Ore Market Remained Firm with an Upward Bias, While Spot Quotes for Silicomanganese Edged Higher

Soaring shipping costs triggered by geopolitical conflicts, rising manganese ore export costs due to tightening fuel supplies in South Africa, tax rate adjustments in Ghana, and the potential impact of typhoons in Australia—all these factors are steadily fueling bullish sentiment in the manganese ore market. As the release of the new round of international manganese ore pricing approaches, a continued upward trend in prices appears to be a foregone conclusion. Last week, the silicomanganese market underwent a period of consolidation; however, with production costs for manufacturers gradually rising and a strong inclination to hold firm on pricing, spot quotations for silicomanganese remained at elevated levels. According to data from SunSirs' commodity market analysis system, as of last weekend, market quotations for silicomanganese (specifications: FeMn68Si18) in the Ningxia region hovered around 5,900–6,050 RMB/ton. The average market price stood at 5,978.00 RMB/ton, representing a week-on-week increase of 2.19%.

I. Influencing Factors

Supply Side: In Inner Mongolia, alloy plants that had previously fired up their furnaces have increased their output. This month, two additional furnaces are expected to be fired up and brought into production, suggesting a modest potential for growth in overall alloy output. In Ningxia, silicomanganese production remains stable, with only a few individual plants adjusting their operating loads. Some manufacturers had previously engaged in hedging activities; consequently, there are currently no spot market price quotes available, and the accumulation of inventory remains a relatively serious issue. 

Southern Region: Production resumption in the South remains limited, production costs continue to rise, and futures market stability is lacking; consequently, current spot prices for silicomanganese are insufficient to cover production costs, and the overall willingness to produce for the month of March remains low. A few individual plants in Yunnan have indicated that they are receiving government subsidies and preferential electricity rates for first-quarter production; while some of these plants have already begun to gradually resume operations, the rapid volatility of the futures market has prompted other facilities to remain in a cautious "wait-and-see" mode. Meanwhile, in the Guizhou and Guangxi regions—where electricity rates have remained persistently high and manganese ore quotations remain firm—balancing production costs remains a challenge, resulting in a continued reluctance to engage in production.

According to statistics, the operating rate of ferrosilicomanganese enterprises nationwide stood at 36.09% last week—a decrease of 0.05% from the previous week—while the average daily output was 28,030 tons, down 210 tons.

According to incomplete statistics, as of March 20, the total inventory held by silicomanganese enterprises nationwide stood at 384,800 tons—a month-on-month increase of 9,000 tons. Specifically: Inner Mongolia held 59,300 tons (a decrease of 3,000 tons month-on-month); Ningxia held 301,000 tons (an increase of 7,000 tons); Guangxi held 2,500 tons (an increase of 500 tons); Guizhou held 3,000 tons (an increase of 500 tons); the Shanxi, Gansu, and Shaanxi region held 10,000 tons (an increase of 1,000 tons); and the Sichuan, Yunnan, and Chongqing region held 9,000 tons (an increase of 3,000 tons).

Upstream Costs: Last week, the manganese ore market remained firm and trended upward. Tensions between the U.S. and Iran drove a sharp rise in ocean freight rates; coupled with a persistently weakening U.S. dollar and rising oil prices, a confluence of factors further elevated mining costs. Market participants anticipate that overseas quotes from mines will continue their upward trajectory—and quite significantly so. To accommodate the higher ore costs expected in the near future, traders have raised their spot price quotes in tandem with the trend. Last week saw an overall increase of over 0.5 RMB/ton-degree, reflecting a distinctly bullish sentiment across the market.

Data indicates that, currently at Tianjin Port, Australian lump manganese ore was quoted at 44.5–46.5 RMB/MTU (↑), semi-carbonate ore at 41–42 RMB/MTU (↑), and Gabonese lump ore at 45.5–46.5 RMB/MTU (↑); at Qinzhou Port, Australian lump manganese ore was quoted at 43–44 RMB/MTU, semi-carbonate ore at 36.5–37 RMB/MTU (↑), and Gabonese lump ore at 42.5 RMB/MTU.

Regarding shipments, the transport of manganese ore has not currently been significantly affected. However, if oil prices continue to rise in the future—particularly amidst a shortage of diesel fuel at mining sites—this could potentially impact mining operations and supply volumes. While there is currently no distinct trend of inventory drawdown in the spot market, overall stock levels remain relatively low.

Regarding demand: On the steel mill side, the mainstream price for the second round of steel tenders stands at 6,150 RMB/ton. A steel mill in East China has tendered for silicomanganese at a price of 6,180 RMB/ton, with a procurement volume of 3,000 tons (cash payment, tax-inclusive, delivered to plant). Another steel mill in East China has tendered for silicomanganese at 6,130 RMB/ton, with a procurement volume of 8,000 tons (acceptance draft payment, tax-inclusive, delivered to plant). A third steel mill in East China has tendered for silicomanganese at 6,258 RMB/ton, with a procurement volume of 500 tons (acceptance draft payment, tax-inclusive, delivered to plant).

Market outlook

Overall, as the traditional peak consumption season progresses, the recovery in demand is accelerating. Coupled with the fact that the strong market trend for manganese ore shows no signs of reversal, SunSirs forecasts that the silicomanganese market is likely to maintain high operating levels in the short term.

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