While manganese exports were initially suspended when South Africa entered lock down, the Tshipi Borwa mine has now resumed operations after being declared an essential service. As South Africa’s lockdown transitions officially from “Level 5” to “Level 4”, owner Jupiter Mines will continue to ramp up production from 1 May with opencast mines entitled to resume full production, while underground mines will remain at 50% output levels.
According to Roskill’s estimates, the lockdown in South Africa removed at least 2Mt of South African supply (in terms of gross tonnage) from the global market. Depending on the duration of on-going restrictions, the impact on the manganese supply chain could be significant.
China’s manganese stocks built up to 5.8Mt at the beginning of April, equivalent to approximately 10 week’s consumption, after a period of seasonally low production related to the COVID-19 outbreak in China. Anticipated tighter supply in May and June was reflected by a surge in ore prices, with ore grading 37% Mn on a CIF China basis rising by 32% to US$6.79/t, and ore grading 37% Mn on a FOB South Africa basis rising by 37% to US$6.31/t; China is more exposed to low-grade ore from South Africa. Silicomanganese and ferromanganese producers have come under cost pressure and, in turn, domestic silicomanganese and ferromanganese prices have also climbed in response to portside ore prices.
China relies heavily on steel and stainless-steel raw materials from South Africa and is turning to heavy stimulus spending to boost infrastructure activity and the domestic economy. Domestic steel production in the country is expected to see recovery quarter-on-quarter, as inventories draw down and production gains more momentum. The extent of the recovery on net exports for Chinese steel will depend on the pandemic situation overseas.
Roskill’s Manganese: Outlook to 2029, 15th Edition report was published in September 2019 and provides analysis on supply, demand, trade, prices, cost curves and forecasts. For more information or to subscribe click here.