The 2010 FIFA World Cup™ is presenting South Africa with challenges in more ways than one. About 80% of the global manganese reserves are in South Africa and a possible shortfall in power supply to the industry during the tournament may affect production, leading to a hike in global manganese prices. The nation’s electricity company Eskom has committed an uninterrupted power supply to the World Cup and the already strained power company is likely to cut back on power supply to the mining companies at the first sign of trouble.
Increasing urbanization, and growth in the automotive sectors of China and India are expected to continue driving the worldwide demand for steel until at least 2012, and consequently, the demand for manganese – an essential component of steel alloys. However, the increased demand has not been able to completely negate the effects of the current glut in the market leading to a downward pressure on steel prices and ergo, on manganese prices. The situation is not all bad though. The price drops over June and possibly July are expected to correct over time since demand for both steel and manganese are still rising.
True, steel consumption has increased since 2009 levels but analysts have warned that the numbers may not match up to the double-digit increases predicted in Q1 of 2010. This could explain why Russian molybdenum major, Strikeforce Mining, withdrew from launching an IPO in the Hong Kong market.
As reported earlier, Chinese firms are still on a molybdenum-buying spree, and they are still funding mining operations in various nations. China, however, is not con-suming the molybdenum but building a stockpile. Analysts predict that China is waiting for molybdenum prices to rise to the 2008 levels of $30 and steel makers will then enjoy lower costs of production.
Despite the weak demand for magnesium displayed by most markets, China’s magnesium production reached 377,000 tonnes during January to May 2010, an increase of 74.5% over the same period last year. The country produced 78,000 tonnes in May 2010, an increase of 9.9% over production figures of April 2010 and 66% over those of May 2009.
Back to Stories
