Reuters reported that ferromanganese prices in Europe dropped to their lowest in almost one year last week and a price pick up is unlikely in the next few months. Demand for the ferroalloy used in steelmaking has weakened due to reduced steel production in Europe.

Ferromanganese MNG FERRO LON fell to USD 1,150 to USD 1,200 per tonne in the European spot market, down from USD 1,170 to USD 1,220 per tonne at the beginning of this month. The ferroalloy has lost over 15% of its value since the beginning of this year.

A European producer said that "Demand for this material has been weak for a long time and I don't see any improvement later this year or in the first quarter of 2012. Flat steel production has been suffering lately and this had a negative impact. The current prices however, are already below production costs. Producers are struggling and I don't think prices can go down any further."

ArcelorMittal, the world's largest producer of steel, recently carried out major cutbacks within its European operations. Two furnaces have been permanently closed at its Liege plant, and furnaces and rolling lines in Spain, Poland and Germany have also been closed due to the fragile economic climate, which hit steel demand.

Traders are predicting further steel production cutbacks, which will likely freeze ferromanganese prices until a solution to the European sovereign debt crisis is found.

(Sourced from www.reuters.com)