MOIL Ltd, the biggest producer of
manganese ore in the country, feels that ore prices have bottomed out and any
positive trigger will take them up, boosting the company's profits.
“Prices have bottomed out. From
here, any small trigger will lead to higher prices and eventually boost
company's earnings,” MOIL chairman and managing director K J Singh said.
However, industry experts do not
see prices rising in the near future as the economic outlook is weak.
Manganese ore prices have been
falling since January due to global glut situation, lackluster US and European
markets and weak consumption growth in steel, the major primary consumer of
manganese ore.
MOIL, which supplies close to 50%
of India's ore needs, has seen sales and net profit dropping 39% and 32%,
respectively during the quarter ended June.
MOIL also feels that there is a
overcapacity situation at present and it will not change in the short term. “While steel production grew 16% world over last year, manganese production
grew by a whopping 32%. In India witnessed an even worse situation of a rise of
6% in production of steel and a jump of 22% in production of manganese ore,” said Singh.
He said the company doesn't see
any change in the glut situation in the next two years unless the expansion
projects of steel firms start coming on-stream.
Weak steel demand could keep
volumes muted in the near-term despite prices being at par with imported ore.
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