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A perfect storm for manganese prices

Metal Tech News - June 12, 2024

Steady demand and Cyclone Megan supply disruptions are giving the metal market its day.

The recent uptick in manganese prices resulting from Tropical Cyclone Megan causing significant damage to South32's Groote Eylandt Mining Company (GEMCO) manganese mine in Australia has prompted Jupiter Mines to release an update on the manganese market landscape, preempting its usual quarterly update.

NASA

Tropical Cyclone Megan caused significant damage to South32's GEMCO manganese mine in Australia's Northern Territory.

"We are expecting manganese prices to be higher than the historical average for the coming months," Jupiter Mines head of marketing Tracey Cloete said. "This is mainly due to supply disruptions as a result of Cyclone Megan which impacted the GEMCO operations."

According to Mordor Intelligence, the manganese market size is estimated at 23.24 million tons in 2024 and is expected to reach 28.1 million tons by 2029, with a compound annual growth rate (CAGR) of 3.87% during the forecast period (2024-2029).

The value of the global manganese market is projected to reach US$29.83 billion by 2028, from US$24.45 billion in 2021, at a CAGR of 2.8% during 2022-2028.

The update utilizes cross-commodity price reporter Fastmarkets, which takes into account two indices: a cost, insurance and freight (CIF) basis for the Port of Tianjin in China, where most manganese is exported to, and a free on board (FOB) basis for the Port of Elizabeth in South Africa, where most of the manganese is exported from.

As of a couple of weeks ago (May 28), the price published by Fastmarkets for 37% manganese ore content is US$6.29 per dry metric ton units (dmtu) on a CIF basis and US$5.43/dmtu on a FOB basis.

This is up significantly from the US$4.80/dmtu on a CIF basis and US$3.92/dmtu on a FOB basis on 30 April, the date of Jupiter's March quarterly update.

The highest previous price recorded was $US7.96/dmtu in November 2016.

"We have seen inventory levels drawn down since November 2023 when producers in South Africa did start to cut back on export volumes. This is true of inventory levels again as a result of less supply from the GEMCO operation into China," Cloete said. "Typically, as inventory levels decline, prices are supported because there is less material in China that can be consumed by plants."

Looking forward

Roughly 90% of manganese ore mined globally is used in the production of steel. With demand and prices expected to continue their ascent, industry players have the chance to supply the gap temporarily left by GEMCO.

Eyes are on ConsMin, which owns the Woodie Woodie manganese mine in Western Australia, and OM Holdings, owner of the Bootu Creek manganese mine in the Northern Territory.

Over the short term, the increasing demand for manganese in lithium-ion batteries powering electric vehicles is adding to the demand, which is being tempered somewhat by unfavorable conditions arising from restrictive governmental policies and growing environmental concerns regarding extraction.

The Asia-Pacific region is expected to continue to dominate the market and is also likely to witness the highest CAGR during the forecast period.

 

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