Manganese producers to cut output again amid price drop
Hlengiwe Motaung
Some South African manganese producers are looking to cut production again due to the sharp drop in seaborne prices over the past few months.
Semi-carbonate prices have tumbled nearly 50% since hitting this year’s high of $5.55/dmtu FOB Port Elizabeth in mid-June. On Friday, the 36.5% manganese weekly price fell to a seven-month low of $2.98/dmtu.
“The expectation is to cut sales and production in this market as it makes no sense to push product that is making losses,” one manganese producer told McCloskey. The reduced volumes are starting to reflect in trucking and rail volumes.
“Transnet is approaching producers to take up slots, an indication that guys are dropping slots,” the producer said. “We are also seeing a reduction in trucking volumes, which is a sign the guys are pulling back.”
This will add more costs to producers as most of them have signed take or pay contracts with Transnet.
“(Transnet) tries to look for someone else who is going to take the slot and if there is no one, ultimately, we record it against that customer and we reconcile the penalties at the end of the year, “a Transnet official said.
Producers hope the latest round of production cuts would help support prices, like they did when they last trimmed output in late 2023.
South African producers cut back on production in late 2023 with semi-carbonate prices well below $3.00/dmtu FOB Port Elizabeth, as it was no longer economical to export at those price levels. That helped the market recover in Q1 2024.
The manganese market then surged in March, eventually rallying to above $5.00/dmtu FOB Port Elizabeth in June, following the halt in South32’s GEMCO exports.
“When the GEMCO crisis hit, and we saw prices going up, every single stockpile in South Africa was loaded on the truck and sent to the port,” said African Rainbow Minerals (ARM) Ferrous Division CEO Andre Joubert.
“Additional tonnes that South Africa put in the market because of ill discipline and short-term views got the market oversupplied by over 1.4 mt, so we are our own enemy in reacting to this short term market volatility and there has to be a market base and some discipline in the industry.”