According to Mysteel, Element 25's 100%-owned Butcherbird manganese mine project in Western Australia may restart operations, and they may sell stockpiled manganese ore or reprocess raw ore storage. The sharp drop in silicomanganese price is attributed to new changes in manganese ore supply, although the supply of high-grade oxide ore is limited and the actual impact is not significant; in addition, yesterday's forced liquidation of longs also put pressure on prices.
It is understood that Element 25's manganese ore production in 2023 is about 208,000 tons, and they stopped manganese ore production in early 2024. The company's quarterly report released in April showed that they plan to restart the Butcherbird manganese mine project within about 11 months after obtaining financing, and the annual output is expected to reach 110,000 tons (high-silicon manganese ore with a manganese content of 30%~33%, an iron content of 9%~12%, and a silicon content of 23%~28%), mainly for the production and processing of manganese sulfate, rather than silicon-manganese alloy.
At present, the silicomanganese market is in the transition stage from peak season to off-season, with supply growth exceeding demand reduction and fundamentals remaining relatively stable. From the supply side, despite narrowing profits, producers are gradually resuming production, thereby increasing the output of silicomanganese. According to Mysteel's statistics, the operating rate of 187 independent silicomanganese enterprises in the country increased by 1.23% week-on-week to 52.75%, with an average daily output of 29,460 tons, and the national weekly output of silicomanganese was 206,200 tons, a month-on-month increase of 4.90%.
In terms of overseas supply, Australia's manganese ore has not yet resumed shipments. Although Gabon's manganese ore shipments have increased recently, its sustainability is questionable, and there is still a supply gap in high-grade ore.
Market observers pointed out that the current silicomanganese market is mainly affected by supply disruptions rather than strong demand. As of June 7, total manganese ore inventories at Chinese ports have decreased by 322,000 tons since late April to 4.609 million tons. Specifically in each region, manganese ore inventories in Australia and Gabon decreased by 32% and 9.3%, respectively, to 685,000 tons and 819,000 tons; manganese ore inventories in South Africa decreased by 7.6%, to 2.341 million tons.
Although the destocking of manganese ore in Chinese ports is slow, structural problems are still significant (high-grade ore stocks are declining rapidly, while low-grade ore stocks are stable). As long as the problem of manganese ore shipment in Australia is not resolved, the supply gap of high-grade ore will be difficult to fill, and the price gap between high-grade and low-grade ore will continue to widen, which may drive up the price of low-grade ore. Considering that the problem of manganese ore shipment in Australia is difficult to solve in the short term, as the inventory of high-grade ore gradually decreases, the price of manganese ore is expected to remain high, and the production cost of ferro manganese is strongly supported. Market sentiment is gradually turning to fundamental logic, and support for the production cost of ferro manganese still exists.
