In 2023, both industrial and battery metal prices suffered from a painful recovery in China and intensifying global inflationary pressures. Many investors don’t know much about manganese, which is in fact the fourth most common metal after iron, aluminium and copper. It also has growing applications as a battery metal.
Over the past year, the manganese market has remained in oversupply amid sluggish demand, even though global manganese ore production has not grown. With data showing that nearly 97 per cent of the world’s annual manganese is used in steel-making, which is not looking good for 2023.
The downward trend in manganese prices began in 2022, with international prices for manganese ferroalloy (smelted directly from ore) falling between 20 and 40 per cent as of early December last year. The main reason for the decline in manganese prices should be related to China’s weak economic recovery. China, the largest consumer of manganese, is also the world’s fourth largest manganese producer, responsible for 90 per cent of global manganese refining. According to China Customs, China imported a total of 15.38 million tonnes of manganese ore in the first half of 2023, an increase of 9.03% over imports in the first half of 2022, while China’s steel production in the first ten months of 2023 did not increase compared to a year ago.
What will be the supply and demand for manganese market in 2024?
In 2024, manganese supply and demand will remain largely dependent on the Chinese economy and the global steel industry. The World Steel Association expects global steel demand to grow by 1.8 per cent in 2023 and a further 1.9 per cent in 2024, with emerging economies, particularly in Asia, expected to recover faster than developed economies.
China’s National Development and Reform Commission had announced a series of measures to stimulate consumption in the middle of last year, focusing on automobiles, real estate, and consumer goods such as home appliances and electronics, all of which should favour a recovery in manganese demand. analysts at the CPM Group believe the outlook for the manganese market is relatively favourable in 2024, but with a limited upturn. Steel production is likely to grow at a compound annual growth rate (CAGR) of just 0.7 per cent between now and 2032.
The World Steel Association (WSA) forecasts that steel demand in India “will grow at a healthy rate”, at 8.6 per cent in 2023, and is expected to be 7.7 per cent in 2024. Although lower than the 9.3 per cent in 2022, both manganese ore production and imports are expected to increase as India implements its Vision 2040.
On the supply side, South Africa, the world’s top manganese producer, is suffering from supply chain logistical challenges, including declining rail capacity and port delays. Analysts note that between now and 2025, about 60 manganese ferroalloy projects in the development stage are scheduled to come on stream globally. If all of these new projects under construction come on stream, global manganese ferroalloy capacity will increase by about 6%, outpacing the expected growth in steel production.
On the pricing front, Fastmarkets expects that global manganese ferroalloy prices could increase by around 7% in the first six months of 2024, but this increase could be wiped out in the third quarter of this year. As for manganese ore prices in 2024, analysts expects to rise moderately to around $520 per tonne, before falling again in the fourth quarter to around $495, an 8% increase on prices in the same period in 2023.
