In the first half of 2019, manganese ore prices remain unexpectedly high. For more than a year, there has been a widespread expectation in the market that rising supply would drag prices back down to a more normal level. This is yet to happen to any significant extent. Though they have softened slightly since the end of 2018, benchmark prices for high-grade ore remain resistant to falling much below the US$6.50/dmtu mark.
There has been a tremendous increase in manganese ore output over the past three years, much of it as a result of significant growth in South African production. Since 2016, global manganese ore output has risen by about 30% on a contained metal basis, and now exceeds 19Mtpy. Despite this, there is widespread disagreement as to how significant the current oversupply in the market is, if indeed there is any oversupply at all. The unexpectedly high level of ore prices at the present time, in contrast to the rather low level of manganese alloy prices, adds to the confusion.
One significant factor over the past year has been the growth in demand for manganese per tonne of steel in China, as a result of the stricter rebar standards which were imposed by the Chinese government in 2018. This came as a surprise to the market, following several years of declining manganese intensity per tonne of steel. The demand for manganese is overwhelmingly driven by steel output, accounting for well over 90% of global manganese consumption.
Though steel will continue to dominate manganese demand, consumption of manganese in batteries is expected to grow rapidly over the next decade. There remain many uncertainties concerning how fast the growth of manganese consumption in batteries will be, and which manganese products and production processes will be required to fulfil the demand from lithium-ion batteries.
Roskill’s latest report contains a 10-year outlook for supply, demand and prices making it essential reading for those looking for a comprehensive analysis of future trends in the manganese sector.