europe rising manganese prices

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    Eramet Sees `Very Sharp' Gain in Second-Half Profit (Update3)

    By Brett Foley

    Oct. 31 (Bloomberg) -- Eramet SA, manager of the world's largest ferronickel plant, said operating profit in the second half will show a ``very sharp'' increase from a year earlier as rising manganese prices boost revenue.

    Sales climbed 24 percent in the three months to Sept. 30 to 897 million euros ($1.3 billion) from 723 million euros a year earlier, the Paris-based company said today in an e-mailed statement. Sales at its manganese unit gained 51 percent to 437 million euros.

    Global prices of the metal, used in steelmaking, almost tripled in the third quarter from a year earlier. Prices averaged $3,850 a metric ton in the third quarter, compared with $1,366 a year earlier, according to data compiled by Metal Bulletin.

    Eramet shares rose 3.15 euros, or 1 percent, to 308 euros at the close in Paris, valuing the company at 8 billion euros. The stock has gained 154 percent this year amid speculation that the Duval family, which owns 37 percent of the company, may sell the stake to Areva SA, French newsletter Challenges said Sept 20.

    Global production of carbon steel, used in engineering and shipbuilding and the biggest use for manganese, rose 7.3 percent in the first nine months of the year, Eramet said.

    `Substantial Correction'

    The company's sales of nickel were little changed at 235 million euros. The price of the metal, used to make stainless steel, halved in the period, falling to as low as $25,100 in August after reaching a record $51,800 a ton on May 9.

    ``There was a substantial correction in the global stainless steel market in the third quarter,'' Eramet said. Demand for austenitic stainless steel, which makes up two-thirds of global nickel consumption, fell 20 percent as customers delayed purchases because of high prices, it said.

    Output at the company's Doniambo plant on the French- controlled territory of New Caledonia fell 4.6 percent to 15,174 tons in the quarter compared with a year earlier after equipment upgrades and bad weather, the company said.

    Full-year production is now expected to be 61,000 tons, down from an earlier forecast of 62,000 tons, spokesman Philippe Joly said today in a telephone interview from Paris.

    While demand in the stainless steel had ``not fully recovered,'' some producers had indicated they may be ready to increase output next year, Joly said.

    To contact the reporters on this story: Brett Foley in London at [email protected] ;
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