32nd International Ferro-alloys Conference Prague, 6-8 November 2016 Markets, prices and trends
Agenda 1. Role of a Price Reporting Agency (PRA) in ferro-alloy price discovery 2. Pricing trends of ores and alloys 3. Ferro-alloy price outlook for the coming year
MB Group: at-a-glance Global Price Reporting Agency with over 950 proprietary price assessments covering every major trade region The original metals price reporting agency since 1882 with more than 1,200 proprietary price assessments in 25 regions across North America Research and consulting business providing a series of short-term and long-term forecasting services to our pricing Real-time exchange data platform and physical price information plus economic and treasury data
FastMarkets
Global Price Reporting Network The worlds largest dedicated metals price reporting team with offices in London, New York, Pittsburgh, Shanghai, Hong Kong, Sao Paulo, Melbourne, Singapore, Mumbai, CIS, Istanbul, and 5 other US locations.
Selection of MB ores and alloys prices from different locations Bulk alloys: Manganese ore, 37% Mn, fob Port Elizabeth Manganese ore, 44% Mn, cif Tianjin High carbon ferro-chrome, delivered Europe Ferro-chrome, 0.05%C - 65% min Cr low carbon fob Pittsburgh Silico-manganese, 65% min fob India Silico-manganese, in warehouse China, min 65% Mn Ferro-silicon Lumpy basis 75% Si imported, in warehouse Pittsburgh
Selection of MB ores and alloys prices from different locations Noble alloys: APT, cif Rotterdam Ferro-tungsten, in warehouse Rotterdam Tungsten concentrate, 65% W03, in warehouse China Ferro-vanadium, delivered in Europe Vanadium pentoxide, in warehouse Rotterdam Ferro-molybdenum, in warehouse Rotterdam
New prices from MB RECENTLY LAUNCHED: Ferro-chrome Japan import 8-9% C, basis 60% Cr, cif Japan, duty-unpaid, $ per lb contained chrome Cr: 60% min C: 8-9% max Si 3-4% max P: 0.04% max S: 0.05% max Size: 10-50mm Lot size: minimum 100 tonnes Payment: LC at sight and TT Assessed by: Singapore Metal Bulletin team Publication time: Between 2pm-3pm London time, every Thursday COMING LATER THIS YEAR: Ferro-nickel premium, 28% -32% nickel contained, cif Shanghai, $ per tonne (monthly) Ferro-chrome South Korea import 8-9% C, basis 60% Cr, CIF South Korea, duty unpaid, $ per lb contained chrome (weekly)
How are Metal Bulletin prices used?
Metals market in perspective Source: visualcapitalist.com
Evolution of price benchmarks
How the price discovery process works
How do we assess prices? Two methodologies Indices and Assessments Indices: single number, a volume-weighted average of transaction data. Methodology generally employed in comparatively liquid market Assessments: the bulk of our prices; a spread/range of reported representative business Both methodologies aim to produce an independent and transparent price reference representative of where the bulk of the SPOT market is
Introducing MInD MB s price data collection system Peer review process Data stored in a secured network and kept fully confidential Full audit trails maintained as required
What are the IOSCO Principles? IOSCO Principles for Price Reporting Agencies The Principles are best practices on: Governance and oversight Quality and integrity of the methodologies Accountability and Audit
Ore and alloy price developments - 2016 Pricing trends of ores and alloys
Ore and alloy price developments - 2016 Manganese ore MB Manganese ore index 44% Mn, cif Tianjin ($/dmtu) 7.50 6.50 5.50 4.50 3.50 2.50 1.50 Collapsing manganese ore prices in H2 20 prompted mine closures Restricted manganese ore supply begins to propel ore prices higher in Q1 2016 Pricing gains accelerate in H2 2016 as demand from China improves while South Africa faces transportation disruptions
Ore and alloy price developments - 2016 MB South Africa UG2 chrome ore prices $/tonne cif China 300 250 200 0 100 50 0 Chrome ore Collapsing chrome ore prices in H2 20 prompt mine closures Restricted chrome ore supply begins to propel ore prices higher in Q1 2016 Pricing gains accelerate in Q3 2016 as demand from Chinese ferro-chrome producers surges
Ore and alloy price developments - 2016 High-carbon ferro-chrome MB High-carbon ferro-chrome prices ($/lb) European and US prices have been remarkably resistant to 1.3 USA China Europe climbing chrome ore prices 1.2 1.1 1.0 0.9 0.8 The failure of ferro-chrome prices to more quickly respond to higher ore prices reflects chronic excess ferro-chrome supply 0.7 0.6 0.5 Oct 14 Jan Apr Jul Oct Jan 16 Apr 16 Jul 16 Oct 16 Extensive ferro-chrome capacity closures in late 20 did not filter through to significantly higher ferro-chrome prices until H2 2016
Ore and alloy price developments - 2016 Ferro-silicon MB Ferro-silicon prices ($/tonne) Europe 75% US 75% China 75% 1,800 1,600 1,400 1,200 1,000 800 Ferro-silicon prices have generally trended lower during 2016 Prices have seen temporary improvement in line with government-enforced smelter closures in China Higher costs, for both energy and coke, are expected to lend support to prices in the final months of the year
Ore and alloy price developments - 2016 Silicon metal MB Silicon metal prices ($/tonne) 3,500 3,250 3,000 2,750 2,500 2,250 2,000 1,750 1,500 1,250 Oct 14 Jan Europe USA China Apr Jul Oct Jan 16 Apr 16 Jul 16 Oct 16 While other alloy markets have seen pricing support from supply outages and cutbacks, silicon metal supply remains ample Silicon metal has the strongest demand-growth prospects across the alloy complex, but for now, supply is outpacing demand Overwhelming view that prices will remain subdued for the rest of 2016
Ore and alloy price developments - 2016 MB Silico-manganese prices ($/tonne) 1,500 Europe USA Silico-manganese Silico-manganese prices bottomed out in late 20/early 2016 in line with most other alloys 1,250 1,000 750 500 Oct 14 Jan Apr Jul Oct Jan 16 Apr 16 Jul 16 Oct 16 Rapid gains in manganese ore prices have yet to be reflected in silico-manganese prices outside of China, indicative of chronic over-supply in the market and subdued demand Prices are improving in early Q4 2016 in Europe & USA as costpush factors influence prices
Ore and alloy price developments - 2016 MB Ferro-molybdenum 65-70% prices ($/kg) 35 30 25 20 Europe Ferro-molybdenum USA The collapse of the energy sector has had severely negative implications for molybdenum demand and prices Ferro-molybdenum prices bottomed out in late 20/early 2016 as the extended period of low prices prompted production cuts 10 Although prices are off the bottom, ample supply and sluggish demand are preventing appreciable price improvement
Ore and alloy price developments - 2016 Ferro-vanadium MB Ferro-vanadium 70-80% prices ($/lb) EU 13 US 11 9 7 5 Ferro-vanadium prices bottomed out in late 20/early 2016 reflecting production cuts and restocking activity US prices soared in Q2 2016 on the back of a successful antidumping case against imports from South Korea US prices slipped back closer to parity with European prices in Q3 2016 as demand faded
Forecasts Ferro-alloy price outlook for the coming year
Metal Bulletin Research ferro-alloy price forecasts 2016/2017 MBR European silico-manganese prices ($/t) 1,000 900 800 700 600 MBR European high-carbon ferro-chrome prices ($/lb) 1.00 0.95 0.90 0.85 0.80 0.75 0.70 Forecast to average 835/tonne in 2017. Forecast to average $0.95/lb in 2017.
Metal Bulletin Research ferro-alloy price forecasts 2016/2017 1,300 1,200 1,100 1,000 900 800 MBR European ferro-silicon prices ($/t) MBR European ferro-molybdenum prices ($/kg) 20 18 16 14 12 10 Forecast to average 1,0/tonne in 2017. Forecast to average $.00/kg in 2017.