CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
Steelmaking ingredient silico-manganese futures in top consumer China rose more than 5% on Wednesday, driven by fears of tightening supply of raw material manganese ore following a longer-than-expected supply disruption from major supplier South32.
The most-active September futures contract on the Zhengzhou Commodity Exchange rose 5.26% to 7,078 yuan ($976.83) per metric ton, its highest level since Sept. 27, 2023.
Transaction volumes of the most-traded futures contract soared by 325% day on day to a record high of 1.09 million lots.
South32, one of the world’s major suppliers of manganese ore, said on Monday it would take about a year – until between January and March 2025 – to restart manganese ore exports from Australia after a tropical cyclone last month damaged infrastructure there. It said it was considering alternative shipping options to mitigate the impact.
In March, the diversified miner withdrew its fiscal 2024 forecast for Australian manganese output after the cyclone shut operations at its Groote Eylandt Mining Co (GEMCO) unit in the Gulf of Carpentaria.
Manganese is mainly used to strengthen steel and increasingly in batteries.
If South32 cannot find alternative shipping routes, there will be a supply gap of around 2.6 million tons of high-grade manganese ore in a year, accounting for 5%-6% of the global supply, analysts at CITIC Futures wrote in a note.
China imported 31.35 million tons of manganese ore in 2023, 16.7% of it from Australia, customs data showed, with analysts at GF Futures expecting this year’s imports to fall by between 4% and 6%.
The price rally of the alloy made of manganese ore came after many ore traders held back from offering cargoes in the portside market in anticipation of higher prices ahead. A few others tentatively lifted offering prices to test the psychologically acceptable level of buyers, industry sources said.
“We have received inquiries from South Korea and Japan where ore consumers typically do not build up inventory,” said a north China-based trader who requested anonymity as he is not authorised to speak to media.
“They may either continue to buy from China or purchase more volumes from the other large supplier (Eramet); in either case, supply of high-grade ore to China is falling.”
($1 = 7.2459 Chinese yuan)
(By Amy Lv and Andrew Hayley; Editing by Jason Neely)
Comments