How real is the manganese metal price bubble?

The manganese metal market is in the firm grip of speculation, almost all of its centers around China, which supplies over 95% of the market. Chinese manganese metal exports rose 29% in 2017 vs. 2016, which probably accounts for the cheap prices in the latter half of last year. In the US, manganese flake imports rose from 9,751 mt in 2016 to 13,230 mt in 2017. Imports of Chinese metal more than doubled to 7,266 mt in 2017 from 2,727 mt in 2016, while imports from South Africa fell to 5,222 mt in 2017 vs. 6,439 mt in 2016.

The latest bubble occurred when TMI, the world’s largest manganese metal producer started cutting back its production at the beginning of the year. TMI has a theoretical capacity of 800,000 mtpy of manganese metal, but analysts say output really is around 700,00-750,000 mtpy.

At various times, the cutback was blamed on environmental cutbacks imposed on the smelter and a restriction in power supplies. However, some analysts believe TMI took the step to firm prices and that succeeded with prices going up an average of 25¢ per lb, f.o.b. China for the export market.

Current spot prices in the US are around $1.08-1.12 per lb, but sellers say based on replacement costs the price should be around $1.20. European prices are around $2,100-2,150 per mt.

The typical pattern for manganese metal is for the price to fall after the Lunar celebrations end.

That means two things, the replacement cost from China has to fall or the US and European prices have to rise. And, buyers and sellers are currently frozen awaiting direction from China.

It is likely that some, probably most, of the production will be reinstated after the Chinese Lunar New Year celebrations, and everyone is watching to see what the reaction will be.

Also in the mix is that TMI is the only Chinese producer which uses imported manganese ore from its mine in Ghana which it bought from ConsMin while the other producers use lower-grade domestic ore. Therefore, any environmental cutbacks imposed on Chinese miners will directly affect the domestic manganese metal smelting industry except for TMI. Either way, the imported manganese ore price is less relevant to the Chinese manganese metal industry.

While demand for manganese metal is increasing, the percentage lags the price increases so far this year.

There are also the lingering doubts on how effective the environmental restrictions really are.

Finally, Eramet’s 20,000-mtpy manganese smelter in Gabon is thought to be running at less than half capacity and virtually all that material is bought for Europe. US imports from Gabon were only 200 mt in 2017 vs. 97 mt in 2016.

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Thanks! A very nice and informative article of the recent events in the Elwcrrolytic Manganese Metal market.

Just one minor correction, Manganese metal is not produced in a smelter, but rather its produced by electrolytic plating and is called Elctrolytic Manganese metal (EMM).

We normally just refer to it as an EMM plant and not a Manganese smelter.

Thank you for your interesting articles.

Best regards,

Morne Ruiters
Market analyst
Manganese metal company
South Africa