By Amy Lv and Lewis Jackson
BEIJING, Feb 6 (Reuters) - Futures prices of steelmaking ingredient silico-manganese in top consumer China surged to a more than six-month high on Thursday, underpinned by elevated manganese ore prices and falling stocks of the alloy used to strengthen steel, analysts and traders say.
The most-traded silico-manganese futures contract CESMc1 on China's Zhengzhou Commodity Exchange closed trading 7.49% higher at 7,292 yuan (about $1,000) a metric ton, outperforming its peers in the ferrous market.
It touched the highest level since July 26, 2024 at 7,302 yuan a ton earlier in the session.
Meanwhile, open interest - the total number of active unsettled contracts - rose for a second straight session by 34% from Wednesday to 572,000 lots, the highest since last May.
The price rally is attributed by analysts and traders to higher costs stemming from rising prices of manganese ore, which is mainly used to make silico-manganese.
Chinese portside stocks of manganese ore CUS-MGOTJP-MMET have fallen to the lowest since July 2020, supporting prices.
That is because supply to China has slid amid the halt of Australian shipments at major producer South 32 S32.AX after a cyclone shut operations at its Groote Eylandt Mining Co (GEMCO) unit in the Gulf of Carpentaria last March.
Also, other major producers scaled down shipments to China after subdued downstream steel demand pressured ore prices, said analysts.
"Portside inventory will likely continue to destock in the near term...but shipments are expected to ramp up driven by rising prices," said Li Xiaochen, senior analyst at SDIC Futures.
"We forecast ore prices to start another round of downturn in the second quarter."
South32 said it has undertaken a phased restart of manganese mining activities at GEMCO project and production has resumed from the primary concentrator.
Helping prices of silico-manganese is also continuously falling stocks with volumes at surveyed Chinese producers slipping by nearly a quarter from the beginning of the year to 150,500 tons on January 31, the lowest level since last August, data from consultancy Mysteel showed.
($1 = 7.2906 Chinese yuan)
(Reporting by Amy Lv and Lewis Jackson; Editing by Mrigank Dhaniwala)
((Amy.Lv@thomsonreuters.com;))
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