101roulette| Ferroalloy: Is manganese silicon crazy or reasonable

Source: Zijin Tianfeng Futures Research Institute

South32 released its latest quarterly report on April 22nd, 2024, which shows that Tropical Cyclone Megan has caused significant damage to mines and ports on Groote Eylandt Island on the northeast coast of Australia's Northern Territory, and the recovery time is expected to be in the first quarter of 2025 (Q3 of fiscal year 2025), far exceeding the expectations of the hurricane that hit the market at the end of March. As soon as the news came out, the manganese silicon contract began to rise sharply, fluctuating more than 200 points during the day, and it was still in continuous fermentation. Many manganese ore traders chose to close the market or hesitate to sell, and the spot silicon and manganese also quickly followed the rising market.

Groot Island Australia mineral output accounts for more than 80% of the total Australian mineral output, accounting for more than 10% of the global manganese ore, and Australia Mine is one of the only two high-quality oxidation ores at present, although domestic Australian ore inventories are historically high. However, if the follow-up shipment needs to be restarted nearly a year later, as shown in the quarterly report, the domestic Australian mine will face a lack of several months, at the same time, it is difficult for Gabon mine shipping to have a big increase at present, according to the current situation. The shortage of manganese ore in the second half of 2024 is almost insoluble, so the rise in manganese silicon cost will continue to ferment.

1 Why does the Australian manganese mine let the manganese silicon crazy

According to South32's latest quarterly report, the hurricane caused widespread flooding in Groote Eylandt and severely damaged critical infrastructure, including terminal and port infrastructure, as well as transport bridges connecting mines and processing plants north of the Western Leases mine. Business recovery focuses on rebuilding key services and dewatering targeted mines. Research on the restoration of wharf and transport highway bridge infrastructure is under way. Terminal operations and export sales are expected to resume in the third quarter of fiscal year 25. The mine is evaluating alternative transport options to mitigate the impact of terminal outages.

According to the financial reports of the major mines, Groot Island Australia accounts for more than 80% of the total Australian mineral output and more than 10% of the global manganese ore, and Australia Mine is one of the only two mainstream high-quality oxidation mines at present.

Figure 1:South 32 quarterly production and sales data

It should be noted that South32 is a mine operator and its quarterly report accounts for only 60 per cent of the total mine, with the remaining 40 per cent owned by Anglo American and the island's mine production of 5.6 million tons in 2023. The output of Gabon mine, which is also a high-grade oxidized ore, is about 740 tons in 2023, and the ratio of the two major oxidized ores is about 3. 4%. If the Australian mine stops shipping from April 2024 to January 2025, the high-quality oxidized ore will be reduced by about 30% in one year.

Figure 2:Comilog quarterly production and sales data

Royal Bank of Canada's Kaan Peker said in a report that repairs could cost $200m and shipments were expected to be suspended for six months (transshipment could fill the gap until the terminal was fully repaired). At the same time, an institutional model in the market predicts that the free cash flow of South32 is difficult to support the maintenance cost.

2 whether the thousand-point market falling from the "sky" is reasonable

At present, domestic Australian ore inventories are at an all-time high and can be used by national alloy mills for about 3 months, which is also one of the main reasons for the weak market response when the hurricane hit, but the nine-month shipments stop still far exceed market expectations. Australian ore inventories are expected to fall sharply to an all-time low in the later period.

Figure 3: inventory map of Tianjin, Hong Kong and Macao Mine

At present, the output of silicon and manganese is at a low level, but some factories have begun to prepare for resumption of production, and it is expected that the subsequent output will gradually recover to ensure the replenishment of iron and steel enterprises in the normal peak season.

Figure 4: weekly output of manganese silicon in China

Figure 5: the output of the top five timber in China

In the case of steel mills resuming production in the peak season, silicon and manganese are facing a more awkward situation. On the one hand, the cost of terminal manganese ore and chemical coke is rising, which promotes the immediate cost of leaving the factory.101rouletteOn the other hand, a lot of inventory is concentrated in the hands of cash traders, warehouse receipts and effective forecasts continue to hit record highs, and the superimposed supply-side low position leads to the limited availability of cash. If the start-up of the Si-mn plant is still difficult to increase, the de-stocking will be accelerated, and the gap between supply and demand continues to expand.

Whichever of these happens, it will drive the rise of manganese silicon contracts.

Figure 6: manganese silicon warehouse receipt + effective forecast

3 profit is good, but don't drink too much.

Generally speaking, the rise of manganese-silicon contract has a strong fundamental support, but the risk point is more prominent, that is, the over-expected supply of alternative oxidation ores such as Gabon ore and non-mainstream ore increases. Follow-up should continue to pay attention to the recovery of Australian mine shipping and transportation.

In the current situation of the raw material side of the main elements is not solved, we can still focus on bargain-seeking long opportunities, but the recent volatility has suddenly increased, investors need to be cautious to chase higher.

标签:

上一篇: crashbandicootnsanetrilogyps4| Guolian Securities (601456.SH): Open source securities give a buy rating, with a target price of 13.8 yuan, an increase of 31.93%
下一篇: wsopvideos2022| Langyuan Shares (300175.SZ): Net profit in the first quarter was 7.06197 million yuan and a year-on-year deficit