minnows| Manganese and silicon become a fierce ghost: Where can supply be blocked and rising? Summary of expert exchange telephone conference

Source: polyester PTA ethylene glycol staple fiber research base

Events:

1) Australian mining giant South32 announces suspension of GEMCOMinnowsThe operation of. A month after the suspension of production, it announced in its quarterly report that the suspension would continue until the third quarter of the company's current fiscal year, that is, from January to March 2025. From the perspective of the impact on China, the impact on China's imported manganese ore is about 9% Mel 10%.

2) the derailment occurred in Gabon, the world's second largest manganese mining country, on April 26, causing damage to nearly 300 meters of track and derailment of 26 empty cars, which may take about two weeks to a month to repair. The monthly transport volume of manganese ore from Gabon is more than 500000 tons / month, and under the condition that the supply gap of South32 manganese mine has existed for a long time, if the repair time of Jiapeng transport railway is too long, it may cause further shortage of manganese ore supply.

[expert opinion]

1. Hot event

oneMinnows.1 incident: disruption of shipments of damaged manganese ore at GEMCO wharf, Australia

In March, Tropical Cyclone Megan caused damage to GEMCO terminals and roads on Groot Island, Australia. South32 said in April that the Australian manganese mine would stop shipments for a year, and manganese prices began to rise.

oneMinnows.2 impact: the loss of manganese ore in Australia is estimated to be nearly 3 million tons

1) current situation: according to the 23-year total shipping volume, Groot Island accounts for about 73% of Australia's total shipments, Australia sends a total of 7.44 million tons, Groot Island sends 5.45 million tons worldwide. The port delivered 4.18 million tons to China in 2023, accounting for 76.7 percent of the port's output. it is calculated that Groot Island shipped 11,500 tons per day, and 1.04 million tons have been sent so far in 2024.

2) it is estimated that if the GEMCO terminal does not deliver goods until the end of the year, it is estimated that the loss of Australian ore will be 28-3.1 million tons, affecting the overall import of manganese ore in China by less than 10%, and is expected to drive the high prices of other high-quality minerals.

1.3concern: South32 operation recovery and announcement

1) whether South32 is willing to bear the repair cost of about US $100 million

2) the short barge efficiency and start-up time of the boat (less affected).

2. Mine end supply: imported manganese ore accounts for 90%, domestic manganese ore accounts for 10%

2.1 imports

1) Total amount: 31.41 million tons of manganese ore was imported in 2023, + 5% from January to March of 2024, and 7.3 million tons of manganese ore was imported, + 0.27% of the same period last year.

2) structure: South Africa accounted for 46.6% of manganese ore imports in 2023, Australia accounted for 16.7%, Gabon accounted for 15.6%, and other regions included Ghana, Brazil, Myanmar, Zambia and so on.

2.2 arrival: the total volume contracted compared with the same period last year

From January to April 2024, the total arrival volume was 7.81 million tons, compared with the same period last year.-10.6% from January to April, Australia arrived 1.43 million tons,-14.4% compared with the same period last year.

1) Australia (15 days by sea): from January to March, the arrival of the port is not affected by the port factors, and the arrival gap is in April. The shipment is 22000 tons in April,-95.5% of the same period last year, and 80,000 tons,-84.3% of the same period last year.

2) Gabon (50 days by sea): the overall number of arrivals in Gabon in the first quarter will remain high in the year, with shipments of 687100 tons in April, 319000 tons in April compared with the same period last year, and-46.8% compared with the same period last year.

3) South Africa: the overseas market improved at the end of 23 years, resulting in some goods flowing into the foreign market, with an arrival of 1.14 million tons in April,-24.5% compared with the same period last year.

2.3 inventory: manganese ore inventory is at a four-year low

1) National inventory: the current manganese ore inventory is 5.113 million tons, compared with 6.041 million tons in the same period in 23 years, 5.54 million tons in the same period in 22 years and 6.013 million tons in the same period in 21 years.

2) Tianjin Port inventory: the current manganese ore inventory is 3.691 million tons, 4.517 million tons in the same period in 23 years, and 4.177 million tons in the same period in 22 years.

3. Silicon and manganese production: demand is expected to improve after the second quarter

Output: 23 manganese series output: Silicon manganese 11.52 million tons, accounting for 77%; high carbon ferromanganese 1.3 million tons, accounting for 8.6%; medium and low carbon ferromanganese 540000 tons, accounting for 3.6%; electrolytic manganese 1.15 million tons, accounting for 7.6%; others accounting for 3%. Among them, silicon and manganese is the main product, with an output of 11.52 million tons and a consumption of 23.04 million tons of manganese ore.

3.2 production areas: inner Mongolia (the advantage of low electricity price and low freight) accounts for about 50% of the output of silicon and manganese, while other places such as Ningxia, Guizhou and Guangxi. In the first quarter, the national output was 2.62 million tons,-4% compared with the same period last year, Inner Mongolia + 8.65%, Ningxia-20.29%, Guangxi-60.56%, and Guizhou + 70.87%.

3.3 cost:

1) Coke: the consumption of chemical coke for smelting 1 ton of silicon and manganese is about 0.5-0.55 tons, the price of chemical coke is increased by 100 yuan / ton, and the cost of silicon-manganese 6517 is increased by about 50 yuan / ton. The cost of silicon and manganese caused by the price reduction of chemical coke in the first quarter of 2024 has reached about 300 yuan / ton. A new round of increases began on April 16, and so far there have been five rounds of increases, and the cost of silicon and manganese has increased by about 300.

2) Electric power: power consumption 3900-4000, electricity price 0.01yuan / kWh conversion alloy cost 40 yuan / ton. The difference between Inner Mongolia and Guangxi is 0.21 yuan / kWh, and the cost difference is 840 yuan / ton. Pay attention to the reduction of electricity prices in Yunnan during the flood season, which may lead to an increase in production.

2.82 million tons of new silicon and manganese production capacity is under construction recently, and the production time will be in the second half of 2024 and 2025. The near future capacity increment is expected to be small. The new production capacity of smelting Si-mn alloy in Inner Mongolia is 1.0906 million tons, and the latest production is likely to be by the end of the year.

3.4 inventory: total estimated national inventory of 850000 tons (one month's production)

3.5 demand Forecast: demand is expected to improve

With the improvement of black prices in the second quarter, the demand for Si-mn alloy at the end of crude steel has improved. According to China's crude steel output of 1.01908 billion tons in 2023, it is expected to be flat or slightly reduced to about 1 billion tons this year. The output of crude steel in the remaining three quarters is about 740 million tons, and the demand for silicon and manganese is about 65-7 million. If the average monthly output of silicon-manganese alloy is about 750000 tons from April to December, the supply and demand can return to the stable stage.

4. Price outlook:

4.1inventory: at present, most of the inventory in the market is 6000-6500 yuan / ton cost production alloy, manufacturers make better profits, but traders are reluctant to sell, pushing prices up.

Spot cost: according to the latest mining price, the cost in the north is about 7300 yuan / ton, and the cost in the south is around 7600-7800 yuan / ton. In the long run, the change of mineral price is the dominant factor.

4.3 external factors: the State Reserve may be held by the end of May (10-200000 tons spot, half a year delivery).

Price for Gabon in June is expected to be US $6.90 / tonnage (an increase of US $2 / tonnage compared with the previous month, equivalent to RMB 18, equivalent to an increase of RMB 1080 in silicon and manganese costs).

4.5Australian mine event: if the terminal does not deliver goods until the end of the year, it is estimated that the Australian ore loss will be 28-3.1 million tons, affecting less than 10% of China's overall manganese ore imports and driving the high prices of other high-quality minerals.

Short-term point of view: the bidding of steel mills stood at 8000-8200 yuan / ton, and the disk reached 8500 yuan / ton to look for support.

4.7 long-term view: the Australian mine gap will continue until the middle of the third quarter, with port inventory shortages appearing in July. The market is likely to continue after the third quarter.

QroomA:

Q: if the price of manganese is getting higher, will there be output supplement in Zambia and other places?Minnows?

A: affected by prices, Brazil, Zambia and other producing areas are expected to be supplemented, but it is not expected to be too large to fully make up for the 10% gap. Supply is expected to increase slowly and will not be shipped to China until after the third quarter.

Q: how is the inventory of silicon and manganese?

A: the total inventory of silicomanganese in China is 85-900000 tons (one-month output), including delivery warehouse 300000, natural block 150000, and the market circulation is about 20-400000 tons. Manganese ore port inventory of 5.113 million tons, corresponding to about 2 million tons of silicon and manganese.

Q: is the Australian incident expected to be resolved in the near future?

A: there is a greater certainty of the impact of events in the short term, and it is difficult to supplement the gap in the second and third quarters.

Q: what is the impact of rising prices on steel costs?

A: manganese ore rose by 1 yuan and silicon and manganese by 70 yuan. The price of silicon and manganese increases by 1000 yuan, and the thread cost increases by 24 yuan, which does not have much impact on steel.

Q: can domestic mining enterprises overproduce to make up for the deficiency? Is there a substitute?

A: the amount of domestic mineral mining will increase, but high-quality oxidized ore must be used in production, and the proportion of overseas ore is about 20%, so the possibility of changing the ratio is very low.

Q: will the price rise lead to a reduction in production in steel mills?

A: the reduction in production in steel mills is mainly due to the increase in the price of iron ore or coking coal, which has little impact on the cost of steel, and is not expected to reduce production because of alloy costs.

Q: the highest price of manganese ore in history? What is the recent trend of manganese ore prices?

The price of manganese ore has fallen in the past 15 years, and overseas miners have greatly reduced production, resulting in a 16-year surge in prices to a high. Cautiously optimistic about manganese prices in the short term, there are not many factors to make up for the gap at present, and manganese ore prices are expected to maintain a good trend in the near future.

Q: what work does Zambia need to increase production?

A: with an annual output of more than 1 million tons in Brazil and hundreds of thousands of tons in Zambia, there is little possibility of a substantial increase.

Q: how to ease the mood of being reluctant to sell? Favorable supporting factors?

A: sales sentiment relief factor: ① South32 has official signals, such as announcing maintenance progress, compensation plan, and so on. There is a drop in the limit of ② futures. Favorable supporting factors: ① other mineral compensation is a long-term process, there will be no short-term large-scale impact, and customs data are delayed, which has little impact on the market mentality. ② Gabon mine July offer. There is a high price of ③ steel.

Q: is there more room for manganese prices to rise?

A: according to the current trend, there is a certain possibility, but it needs to be based on the fact that South32 has not released any maintenance.

Q: what is the volume of domestic manganese ore production? Can you keep up with the increase in overseas mines?

A: the annual output of domestic mines is about 3-5 million tons, and there will be a corresponding increase, but there will be a certain gap between the increase of overseas mines and that of overseas mines.

Q: influence on the price of electrolytic manganese?

A: the downstream of ① electrolytic manganese is stainless steel, the smelting ore is low grade ore, and the cost effect is not as large as that of silicon and manganese. ② high silicon alloy and low carbon ferromanganese can replace electrolytic manganese, and there will be room for growth in the later stage, but the range is not large.

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