CRU: Manganese Metal Price Hikes - a Storm in a Teacup

LONDON, May 24, 2018 /PRNewswire/ --

In April 2018, news broke that Ningxia Tianyuan Manganese Industry (TMI) had received financing from the asset manager China Huarong in a structured financing deal that failed to meet regulations, covering up the major Chinese electrolytic manganese metal (EMM) producer's financial losses.

The market reacted with customary ardour: EMM offers rapidly spiked, creating a fertile ground for speculators, and as all material for shipment was halted, spot deals were confirmed as high as $2,400 /t DDP Europe, with offers reportedly $300-400 /t higher still.

TMI's future remains uncertain, and as the dust settles, the prevailing narrative seems to be focused more on the rooting out of political corruption than TMI's own finances. Nonetheless, the whole ordeal has one major takeaway for manufacturers: that the supply and price of manganese metal remains hugely vulnerable to market and policy-driven shocks in China, creating regular intervals of strong price volatility.

Yet whilst this most recent bout of price volatility has had a defining driver in the form of TMI's uncertain future, this is far from being the single factor affecting supply; nor does the success or failure of the market hinge upon this scandal. In truth, it is the confluence of primarily policy-driven structural supply side developments and growth in consumption, including new demand from the energy storage sector, which compound the challenges inherent in a highly concentrated supply base and cast a constant spectre of volatility, a point that must not to be overlooked by manufacturers, developers and government planners.

Supply security is a pipe dream, despite EMM's strategic importance

The key issue with the EMM market's potential volatility is the material's critical importance for manufacturing and the military industrial complex. EMM's function in industry is simple yet crucial, fulfilling an important strategic role as a key alloying material in the manufacture of high strength steel for use in automobiles, heavy duty equipment (such as mining trucks), military and shipbuilding. These vital uses led the US government to classify manganese as a strategic metal back in 1987 ? a definition it upholds to the present, with the USGS reaffirming its status as a critical product of strategic importance to US industry and national security in its most recent report on critical metals. This status extends beyond the jurisdiction of the US, with manganese metal holding a great importance for governments around the world.

Read the full story: https://www.crugroup.com/knowledge-and-insights/spotlights/2018/manganese-metal-price-hikes-a-storm-in-a-teacup/ 

Read more about CRU: http://bit.ly/About_CRU 

About CRU

CRU offers unrivalled business intelligence on the global metals, mining and fertilizer industries through market analysis, price assessments, consultancy and events.

Since our foundation by Robert Perlman in 1969, we have consistently invested in primary research and robust methodologies, and developed expert teams in key locations worldwide, including in hard-to-reach markets such as China.

CRU employs over 260 experts and has more than 10 offices around the world, in Europe, the Americas, China, Asia and Australia ? our office in Beijing opened in 2004.

When facing critical business decisions, you can rely on our first-hand knowledge to give you a complete view of a commodity market. And you can engage with our experts directly, for the full picture and a personalised response.

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