Manganese ore prices seen as 'stuck in unexciting range' despite output cuts

Declining stocks of manganese ore in top global buyer China have put a floor under a prolonged price slide, executives said on earnings calls for the quarter ended December 2023.

China's slow property sector dragged down prices for the key stainless steelmaking ingredient for much of 2023. Production cuts responding to low prices have probably put a halt to the slide, but producers have enough capacity to respond to any sign of rising demand. Increased production would prevent any sustained price increases, analysts told S&P Global Commodity Insights.

"Manganese prices have started to respond to reduced supply, and that's resulted in the drawdown in Chinese stockpiles to where they now sit around more normal levels," Brad Rogers, CEO and managing director of manganese producer Jupiter Mines Ltd., said during a Jan. 31 earnings call. "So hopefully we've been through this period of ... price disruption."

The price of 32% grade manganese ore at China's Tianjin port was assessed at $4.09 per dry metric ton unit on Feb. 19, up from a multiyear low of $4.07/dmt reached several days in January and February but down 17% year over year, according to S&P Global Market Intelligence data.

The market is watching a new state-backed project in China that will grant development loans to more than 8,200 residential projects whitelisted for being deemed the most financially sound, according to consultant SP Angel. If successful, the program would increase building in China and, in turn, boost demand for stainless steel.

The plan will "at best" stabilize the commercial real estate sector, said Colin Hamilton, BMO Capital Markets' managing director for commodities research.

"The only potential upside would come from government-backed public housing acceleration," Hamilton told Commodity Insights.

Hamilton does not expect it to translate into much of a lift for the manganese ore outlook.

"I think we have seen enough cuts to put a floor in the market, and I am a little more comfortable with the global steel cycle, but any price rally could bring back idled capacity quite quickly. Thus, I think ore prices are stuck in an unexciting range," Hamilton said.

Falling South African supply

China's stockpiles have declined as a result of South African exports falling about 6.7% in the fourth quarter of 2023, Graham Kerr, CEO of diversified Australian miner South32 Ltd., told reporters Feb. 15 during a media call. Most South African supplies face higher logistics costs as they move to port by truck.

"When you get to a certain price point, that trucking is no longer economic, so it falls out," Kerr said.

South32 saw its realized price for Australian manganese ore fall 17% year over year to $3.79/dry metric ton unit in the six months to December 2023 and its realized price for South African supply fall 15% to $3.03/dmt, the company said Feb. 15 in its half-year earnings.

South32's overall manganese ore exports fell 13% in the December 2023 quarter in response to lower prices. Its ore output in Australia fell 9% year over year in the second half of 2023 year to 1.679 million metric tons, while sales increased 13% to 1.864 MMt during the same period. The miner is the world's top manganese producer, according to Market Intelligence data.

Jupiter Mines also noted much lower levels of road trucking in South Africa due to the lower manganese prices. Its flagship Tshipi Borwa manganese and iron ore mine in South Africa, however, can send shipments by rail, Rogers said on the earnings call.

"We've been railing more volume than we expected to do," Rogers said.

Tshipi Borwa was the world's fifth-largest manganese-producing project in 2022, according to Market Intelligence data.