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|General Review Of Manganese Ore In 2006 And Its Outlook For New Year|
|= Exhausted New Investments In Mn Mines Will Cause To Tighten The Supply In 2 - 3 Years Later|
The negotiation between Nippon Steel and BHP Billiton on price of high grade lumpy manganese ore for shipments to Japan in the fiscal year of 2007 ( April 2007 to March 2008 ) was taken place on the 10th of January and has been settled by a reduction of 10% from the price fixed for shipments in the preceding fiscal year of 2006. This reduction of 10% is considerable, following a reduction of 24.5% on the price for shipments in 2006. The above negotiation for 2007 was also settled with a rapidity.|
Although prices of manganese ores contracted with Chinese consumers for shipments in the calendar year of 2006 were materialized to recover in the second half, its prices have generally weakened and, therefore, a reduction of 10% for Japan has been considered as a reasonable settlement. It seems that new price of Australian high grade lumpy manganese ore with Mn 48%, as thought to be a kind of benchmark, will come to US$2.70 per Mn 1% FOB compared with that ( US$3.00 ) settled for the preceding fiscal year of 2006.
However, apart from this settlement with Japan, there is a big probability that China, where is the largest market to import 6 million tons per annum of manganese ores, will work on prices of manganese ores for shipments in the calendar year of 2007 on another direction. In this case, it is interested in knowing how extent does a rise of prices for manganese ores as considered by major manganese mines to be materialized permeate into the market. On the other hand, in view of the background which current prices of manganese ferro-alloys are still not fully payable for its production cost, it is wondered how range does China, having become the largest country to import manganese ores in the world, allow a rise of prices for manganese ores. China has exhibited their leadership on price of iron ore for shipments in 2007 ( firstly agreed to a rise of 9.5% from that for 2006 ) and it is now marked whether China is able to exhibit again their leadership on the negotiations to settle prices of manganese ores to be shipped in 2007 or not, because the actions to be taken by China will put a substantial influence on the world market of manganese ore.
Major manganese mines in the world have been not satisfied with prices of manganese ores settled for shipments in 2006 and, therefore, will take a stance to rise these prices for shipments in 2007. According to the settlement of accounts for the financial year of 2006 ended on the 30th June of 2006, which was released by a specialized manganese mine ( CML ) in Australia, a fall of prices for manganese ores caused to turn to a loss of A.$6.5 million but the structure to decrease production of manganese ore at manganese mines has at last come to an end by the first half of 2006 and these mines are in the phase to increase their production of manganese ore from the second half on a basic tone. Therefore, major manganese mines are on the stage to puzzle whether their priority for negotiation has to give to a rise of price or an increase of quantity.
According to an information from China, Chinese producers of ferro-alloys have still opposed strongly to the proposal made by major manganese mines, including the mine in Australia, which is offering high grade lumpy manganese ore with Mn 48% at US$2.80 - 2.85 per Mn 1% CIF China for shipments in January - March quarter of 2007. However, the price of this ore for shipments in April - June quarter of 2007 is in the direction to be materialized by a rise. It is a obvious matter that the price of medium grade manganese ore for shipments to China in the second half of 2006 had risen on CIF base. However, this rise of CIF price was mainly due to the soared ocean freight and able to cover only a portion of the increased transportation charge.
The price of medium grade manganese ore ( including siliceous ore ) settled with Chinese customers had bottomed out by that for shipments in April - June quarter of 2006 and, then, risen by 5 - 10 US-Cents per Mn 1% on CIF base for each quarter. However, it is wondered whether these rises are able to mean a complete rebound of prices for manganese ores or not. It is also questioned whether each mining company is able to feel a response in net income from their sales of manganese ores or not. Manganese mines are supposed to have been not satisfied with this extent of the rises.
According to an information from the person closely concerned in manganese ore, the prices ( per Mn 1% on CIF base ) of medium grade manganese ore settled with Chinese customers for shipments in the recent three quarters were <> July - September 2006 quarter : US$2.25, <> October - December quarter : US$2.35 - 2.40 and <> January - March 2007 quarter : US$2.50, suggesting a basic tone to improve the prices. However, a main factor for these rises was the soared ocean freight as mentioned above and it is still opaque whether these rises of prices for manganese ores were able to penetrate into FOB prices to be received by manganese mines as net income or not.
It is estimated that China would have imported 6,000,000 tons of manganese ores in the calendar year of 2006, having increased by about 30% compared with that ( 4,587,000 tons ) in the preceding year of 2005. The total quantity of manganese ores imported into China in 2005 had a slight decrease of 1.,5% from that in 2004, indicating a time to adjust the ore stocks in China, but that imported in 2006 had a recovery. China digested a considerable quantity of manganese ores said as stocked in China with nearly 2,000,000 tons at the end of 2005 and, after that, has still demanded to import more manganese ores. The output of crude steel in China for 2006 recorded 400 million tons and, accordingly, the demand for manganese from the steel industry of China has expanded substantially. Also, the exports of manganese ferro-alloys from China have become active again. These movements have stimulated the demand for manganese ores in China.
Apart from China. the open markets left for manganese ores are only Japan ( to import 1,000,000 tons / year ) and South Korea ( to import 340,000 - 400,000 tons / year ) but the quantities of manganese ores to be imported by these two countries have been stabilized in the last several years and, therefore, the competitions to have more shares have been also restricted. Japan and South Korea have been considered as the grown markets. Nevertheless, as far as prices of manganese ores are concerned, the circumstances have to allow a strong influence on the prices put by China as mentioned above.
According to an information from the person closely concerned in manganese ore, the prices of high grade lumpy manganese ore contracted by South Korean companies for shipments in one year from July of 2006 would be in the range of US$2.70 - 2.90 per Mn 1% on CIF base. On the other hand, according to the statistics released by the Ministry of Finance in Japan, the unit prices of manganese ores imported into Japan in November of 2006 and discharged at main ports were <> at Anan port : 24,928 tons of South African ore at US$3.084 per Mn 1% on CIF base, <> at Mizushima port : 44,418 tons of South African ore at US$3.385 per Mn 1% on CIF base and <> at Higashi-Harima port : Australian ore at US$3.12 per Mn 1% on CIF base.
The international prices of manganese ores have been not entirely maintained on a firm tone and are still in a period to recover but manganese mines in overseas countries have strongly hoped to accomplish an attitude to rise prices of manganese ores. In view of the fact that manganese mines have completed their plan to expand the capacity for production during 2005 to 2006, these mines have to give their priority to the quantity to be sold and, consequently, have suffered from a depression of the prices to be contracted. In addition to the factors to increase production of manganese ore, consisting of the structure set up by the Groote Eylandt Mine of BHP Billiton in Australia to produce 3,000,000 tons per annum and the structure scheduled to be completed during 2007 to 2008 by the Moanda Mine of Eramet ( Comilog ) in Gabon to produce 3,500,000 tons per annum, new project at the Bootcreek Mine in Australia ( Northern Territory ), producing 500,000 tons per annum from autumn of 2006, and a revival of the Buritirama Mine in Carajas area of Brazil, producing 500,000 - 600,000 tons per annum, have existed. Accordingly, a substantial increase of the supplies has put a pressure on the market of manganese ore at present.
However, any project to develop hereafter new manganese mine is so far not seen. Apart from this year of 2007, if new manganese mine could not be inaugurated, a possibility to tighten again the supply of manganese ore as raw material in the next 2 - 3 years would dwell in the market, as far as the world production of crude steel expands further on the current pace.
Many of the existing manganese mines have located in inland places to take a long distance for transportation to shipping ports, excluding the Groote Eylandt Mine of Australia and the Nstua Mine of Ghana. The capacity in South Africa to transport manganese ore from mines to ports has a limitation at present ( 2,500,000 tons / year to transport from Hotazel district to Port Elizabeth port ) and, under the present situation which a certain increase of the cargoes is unable to expect in a short period, the capacity to produce manganese ore and transport it held by the Azul Mine of CVRD in Carajas area of Brazil has to be expected. Nevertheless, CVRD had entered into the structure to decrease their production of manganese ore from autumn of 2005 and has at last lifted this structure from July - September quarter of 2006 but an intention to produce stably manganese ore is not felt from the behavior taken by CVRD. The new project to develop manganese mine in Gabon has retreated for the matter of transportation.
An important key for supply of manganese ore in the future is the production activity of manganese ore by CVRD of Brazil ( to produce 3,000,000 tons / year ). While CVRD has completed on the beginning of January of 2007 their acquisition of Inco in Canada for US$20,000 million as a leading producer of nickel to bring in a high profitability, it has now turned to ask for judgment on the worth of CVRD concerning whether this giant enterprise of Brazil will still maintain their intention to operate manganese business or not.
|last modified : Thu 18 Jan, 2007 [11:07]|