Freight costs drive manganese prices to nine-year high
Soaring freight costs, partly owing to the recent Suez Canal gridlock and strong demand from steel producers, has propelled manganese metal prices to their highest in almost nine years, though supplies in the pipeline are likely to reverse the trend.
Prices of electrolytic manganese metal or flakes MNG-LON, used to strengthen steel, have jumped more than 84% since the beginning of the year to $2,950 a tonne, having stood at about $1,600 last November.
Manganese metal prices are not sustainable at these levels, said CRU senior steel analyst Clare Hanna, citing “significant overcapacity in the industry”.
“They rose recently partly because demand improved, partly due to the rise in container costs and because available supply was reduced by maintenance activities at plants in China before Christmas and then again in March and April,” she said.
Consultancy Roskill expects manganese metal demand and supply both to be at about 1.4 million tonnes this year, leaving the market balanced.
The world’s largest producer of manganese ore is South Africa, where the Kalahari Desert is believed to hold more than 70% of global reserves, though China dominates in production of manganese metal.
Global container shipping rates had already surged to record levels on a spike in restocking demand in the United States and Europe, container scarcity at export hubs and changes in freight flows because of the COVID-19 pandemic.
The Ever Given cargo ship blocked global shipping in the Suez Canal last month, holding up passage of more than 400 vessels.
“Stocks were already low, so this (congestion in Suez) did not help at all. Supplies are very tight in Rotterdam warehouses,” one European trader said.
Strong manufacturing activity and robust demand for steel has driven up consumption of alloys and raw materials that go into steel. Alloys account for about 96% of demand for electrolytic manganese metal.
Source: Reuters (Reporting by Sumita Layek in Bengaluru Additional reporting by Bharat Govind Gautam Editing by Pratima Desai and David Goodman)