In mid-March 2024, the Groote Eylandt Mining Company, also known as GEMCO, halted its export operations from Groote Eylandt in Northern Australia, following extensive port damage from a severe tropical cyclone. This unexpected suspension, initially thought to be temporary, now appears likely to extend into Q1 2025. As a key supplier of manganese ore to the Far East and India, GEMCO’s absence has left a notable void, given the significant role manganese plays in steelmaking.
With shipments at a standstill and expected to remain so for the foreseeable future, the demand for Supramax bulk carriers in the Pacific is poised to suffer. Around 21% of all Supramax loadings in Australia last year originated from the port, which can only load vessels up to the Supramax size category due to berth limitations.
With GEMCO out of the picture, manganese smelters in Asia have had to act swiftly to find new suppliers, and adjust their production processes to use or blend other grades of manganese ore. This shift is crucial for smelters facing limited or no manganese ore stocks, which may otherwise have to face a production stoppage.
As such, the traditional Supramax trade route for manganese ore between Australia and Asia is now seeing a significant shift towards increased fronthaul activity, albeit to the benefit of the Capesize market. An increase in Newcastlemax shipments were observed from Ghana’s Takoradi port to China in recent months, and while these were still at small volumes of 2-3 sailings per month, this support to the Capesize market comes at the expense of the Supramax category.
Manganese ore exports from South Africa to Asia are another significant trade route, with nearly half of global manganese ore exports in 2023 originating from the country. Around 59% of South African manganese ore exports were shipped on Ultramax vessels, and another 30% were done on Supramax tonnage.
While manganese ore exports from South Africa are estimated to have increased over 6% year on year in the first half of 2024, this gain has been driven by an over 35% increase in Ultramax shipments during the period, but again at the expense of the Supramax segment which has seen its sailings from South Africa fall by around 24% year on year. However, this shift in demand to the larger Ultramax vessels has been afoot even before the GEMCO disruption, possibly due to less restrictive berth requirements and economies of scale. Nonetheless, this bodes ill for demand in the Supramax segment again, which is not finding better footing on this other key trade route.
GEMCO’s extended suspension has inadvertently reshaped the manganese ore market, influencing shipping routes and market dynamics for the Supramax segment and, to an extent, the Capesize market.
