Fastmarkets examines the disconnect between manganese ore and alloy prices, which has led to squeezed margins for alloy producers.
Leading alloy producers are considering the future of their assets amid historically high ore prices and subdued alloy prices.South32 announced in May it is reviewing its alloy assets and may divest them, while Ferroglobe said in early June it is considering cutting output further, after implementing cuts in November 2018. Oversupplied alloy markets and a tighter ore market have been blamed for the disconnect in recent months. But these do not fully explain the persistent disconnect between the markets, especially since the alloy market is less oversupplied than initial expectations and the lack of correlation is expected to continue despite falling ore prices in recent weeks. Fastmarkets poses and answers six important questions about the disconnect.How did the disconnect arise?Ore prices have traded at historical highs over the past two-to-three years, fueled by a mix of strong demand from Asia, including China and Malaysia, as well as trader positioning that...