Newsletter summary
Shipments of the GEMCO manganese mine in Australia have been suspended for one year, which is expected to affect about 10% of China's imported manganese ore, pushing up the price of high-grade ore. Damage to Gabon's railway could exacerbate supply constraints. Domestic silicomanganese demand is expected to improve, short-term manganese prices are bullish, long-term need to pay attention to the recovery of South32.
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[links between GEMCO operations of Australian mining giant South32 suspended and imports of manganese ore from China intensifiedHiddentigerdragonAustralian mining giant South32 has announced a temporary suspension of GEMCO operations, a move expected to affect 9 to 10 per cent of China's manganese ore imports. Earlier, Gabon, the world's second largest manganese mining country, derailed, resulting in about 300 meters of track damage, 26 empty cars derailed, repair work may take two weeks to a month. Currently, monthly manganese ore shipments in Gabon exceed 500000 tons. If the supply gap in South32 has been in place for a long time, railway transport in Gabon has been interrupted for too long, which may further aggravate the tension in the supply of manganese ore.
South32 announced that shipments of the Australian manganese mine would be suspended for one year due to the port incident after the GEMCO wharf and roads in Australia were damaged under the influence of Tropical Cyclone Megan in March. This caused the price of manganese to rise. It is estimated that Australia's manganese ore shortfall will be close to 3 million tons.
According to 23 years of data, Groot Island accounts for about 73% of Australia's total shipments. Australia sent a total of 7.44 million tons in the whole year, of which Groot Island sent 5.45 million tons. In 2023, the port shipped 4.18 million tons to China, accounting for 76% of its total shipments.Hiddentigerdragon.7%. With an average daily shipment volume of 1Hiddentigerdragon. 150000 tons, 1.04 million tons have been issued since 2024. If shipments at the GEMCO terminal are disrupted until the end of the year, the loss of Australian mines is expected to reach 2.8 million to 3.1 million tonnes, affecting less than 10 per cent of China's overall manganese imports and could push up the prices of other high-grade ores.
Expert analysis pointed out that whether South32 is willing to bear the repair cost of about 100 million US dollars, as well as the efficiency and start-up time of small vessels (with less impact) have become the focus of market attention. At the same time, imported manganese ore accounts for 90% of China's total manganese ore, while domestic manganese ore accounts for 10%. The import of manganese ore reached 31.41 million tons in 2023, an increase of 5% over the same period last year.HiddentigerdragonFrom January to March 2024, the import of manganese ore was 7.3 million tons, an increase of 0.27% over the same period last year.
Structurally, South Africa accounted for the highest proportion of imported manganese ore in 2023, accounting for 46.6%, followed by Australia (16.7%) and Gabon (15.6%). Others include Ghana, Brazil, Myanmar and Zambia. However, shipments fell from January to April 2024 compared with the same period last year, with a total of 7.81 million tons, down 10.6 per cent from the same period last year, while Australia received 1.43 million tons, down 14.4 per cent from the same period last year.
In terms of mining stocks, the current national manganese ore inventory is 5.113 million tons, down from 6.041 million tons in the same period in 2023. The inventory of manganese ore in Tianjin Port has also dropped from 4.517 million tons in the same period in 2023 to 3.691 million tons at present.
In the field of silicon and manganese production, demand is expected to improve after the second quarter. In the output of manganese series in 2023, silicon and manganese is dominant with an output of 11.52 million tons, accounting for 77%. Due to the advantages of low electricity price and low freight, the output of silicon and manganese in Inner Mongolia accounts for about 50% of the country's total. In the first quarter of 2024, the national output of silicon and manganese reached 2.62 million tons, down 4% from the same period last year.
In terms of production cost, the fluctuation of coke price has a significant impact on the cost of silicon and manganese. For example, due to the reduction in the price of chemical coke in the first quarter of 2024, the cost of silicon and manganese has decreased by about 300 yuan / ton. However, since April 16, the price of chemical coke has experienced five rounds of increases, resulting in another increase in the cost of silicon and manganese by about 300 yuan / ton.
Power cost is also a key factor affecting the production cost of silicon and manganese. The difference in electricity price between Inner Mongolia and Guangxi leads to a difference of 840 yuan / ton in the production cost of silicon and manganese. Market concerns include the reduction of electricity prices in Yunnan during the flood season, which may bring more opportunities to increase production.
In terms of new production capacity of silicon and manganese, the recent construction and new production capacity of silicon and manganese has reached 2.82 million tons, which is expected to be put into production in the second half of 2024 and 2025. The new production capacity of Si-mn alloy in Inner Mongolia is expected to reach 1.0906 million tons, which may be put into production by the end of the year.
The national inventory of silicon and manganese is expected to reach 850000 tons (equivalent to a month's output), while on the demand side, demand for silicon-manganese alloys has improved with the rebound in black product prices in the second quarter. If China's crude steel production is estimated at 1.01908 billion tons in 2023, it is expected that this year's output will remain stable or drop slightly to about 1 billion tons.
In terms of price outlook, as most of the inventory in the market is produced at a lower cost in the early period, manufacturers are making good profits, but traders' reluctance to sell leads to a continuous rise in prices. According to the latest mineral prices, the cost of silicon and manganese in the north is about 7300 yuan per ton, while that in the south is about
