When BHP Billiton completes the separation of its smaller businesses into a new publicly listed company called South32 on Monday it will also be jettisoning 2015’s worst-performing mined commodity.

Benchmark manganese ore, a widely used ingredient in steelmaking, has dropped 30 per cent since the start of the year to less than $3 a dry metric tonne, weighed down by weak demand and high stocks at ports in China. That is a worse performance than the 26 per cent drop in metallurgical coal and a decline of 12.5 per cent for iron ore so far this year.

Analysts are now forecasting the metal, which rode the construction and property boom in China, could remain in the doldrums for five years.

“We don’t see the price getting back to $4.50 — last year’s average price — until 2020,” Macquarie said in a recent report.

Manganese is the 12th most abundant element in the earth’s crust. Most of the manganese produced each year — Australian and South Africa are among the biggest suppliers with China — is used in the production of steel. It is either used as an alloying agent to increase strength and toughness of steel, or to remove residual sulphur or oxygen.

South32, named after the line of latitude linking its business centres in Perth and Johannesburg, will be the world’s biggest producer of manganese when it starts trading in Australia, South Africa and London on Monday.

Forecasts for the company’s market value have dropped sharply since the demerger was announced last year, as prices for its main products, which include aluminium and its low-cost manganese assets, have dropped. Analysts are unusually far apart in their forecast valuation of the firm, putting it at anywhere from $7bn to $14bn.

For the past couple of years the 19m-tonne-a-year manganese market has been struggling to digest a supply glut. Encouraged by prices that reached an $18 a tonne peak before the financial crisis, output surged as new mines, mainly in South Africa, came on line. This contributed to a large increase in stocks.

CRU, a consultancy, estimates the market was oversupplied by 843,000 tonnes of contained manganese in 2013 and 350,000 tonnes in 2014. Traders say it will take some time to clear the overhang. CRU is forecasting a deficit of 364,000 tonnes in 2015 and says struggling producers have benefited from lower costs after the oil price fall and the weakening of most commodity currencies.

At the same time, demand for manganese in China, the world’s biggest producer and consumer of steel, has slowed. Many analysts are forecasting flat to negative growth in Chinese steel consumption this year and demand has also been hurt by the closure of ferroalloy plants in India.

Unlike other steelmaking ingredients such as iron ore, where there is a liquid derivatives markets, the price of manganese is set by transactions in the physical market. As such, some analysts believe it more accurately reflects conditions in the steel industry.

Over the past six weeks there has been a divergence in the performance of manganese and metallurgical coal, which is also used in the steelmaking process. While iron ore has climbed 35 per cent in a breathtaking rally, manganese and metallurgical coal are trading at levels last seen in early 2007.

“Without any financial market distortion, the lesser steelmaking raw materials perhaps better reflect the subdued feeling of the global steel industry, given low (if potentially bottoming) prices and relatively weak demand growth,” Macquarie said in its recent report.

However, others take a different view of this relatively opaque market.

Anna Fleming, consultant at CRU, says manganese lagged behind the collapse in other steelmaking ingredients, pointing out its resilient performance at the end of 2014 when the price of iron ore was falling sharply.

“We are starting to see more positive signs coming out of the Chinese steel market. But ferroalloy producers are still struggling with cash flow and operating hand to mouth, so their ability to buy ore is restricted,” she said.