EU Manganese Flake Prices Surge Amid Ningxia Tianyuan Production Cuts

Ningxia Tianyuan

European manganese flake prices soared last week, driven by supply concerns following Chinese producer Ningxia Tianyuan's announcement of a production plant suspension. The situation was further compounded by a decision from China's manganese industry alliance to implement production cuts.

Early last week, Ningxia Tianyuan declared its plan to halt operations at a plant with a capacity of 100,000 tonnes per year. The company has yet to specify when this suspension, intended for equipment upgrades, will commence.

In response, prices within China surged immediately. As of June 20, the ex-works price for 99.7% minimum manganese flake rose to 13,700-13,900 yuan per tonne, marking a 300 yuan increase since June 17.

Export prices from China also saw a rise. The supply concerns, exacerbated by high freight costs, have further pressured European prices upward. By the end of last week, freight rates had escalated to $220-230 per tonne, up from $140 a few weeks ago and significantly higher than the $70 per tonne rate earlier this year, according to traders.

This current pricing dynamic is likely to deplete manganese flake stocks within Europe, as many traders are reluctant to purchase at current elevated prices, doubting their ability to sell at a profit by the time shipments arrive in October. Shipping times have also reportedly lengthened, now ranging from 60 to 75 days.

One market participant expressed hesitation in offering material, preferring to ensure he can meet the demands of his existing customers.

European market players are wary of committing to long-term purchases at these heightened prices, opting to sell existing stocks without acquiring new shipments from China.

Consequently, manganese flake inventories in Europe are expected to diminish soon, potentially exerting additional upward pressure on prices.

Simultaneously, production in China is anticipated to decline. Several market participants have reported planned production cuts following a recent meeting of the manganese industry alliance.

The manganese industry alliance, which includes Ningxia Tianyuan, South Manganese, Wuling Manganese, and seven other producers, agreed last weekend on near-term production guidelines. These members account for 80-90% of China's total production capacity, producing between 130,000 and 150,000 tonnes per month.

However, it remains uncertain whether the alliance will fully implement the proposed production reductions.

Meanwhile, subdued demand within Europe may also act as a counterbalance to price increases. The high European prices are primarily a result of supply-side factors, with demand from Europe's steel industry remaining unchanged. It remains unclear whether there is sufficient buyer interest within the European steel industry to sustain prices at their current levels.