Indian silico manganese offers hit a historic high of INR 100,000/tonne (t)-mark this week. According to eminent market experts, for the first time ever, because of a demand-supply mismatch, prices rose to this unprecedented level.
“Such a rally in prices was witnessed way back in 2008, when prices around that time had touched INR 80,000/t levels. But then the market had crashed afterwards. However, this time, it looks like the market will remain strong for the next three months on genuine short supply and with international demand picking up,” informed a silico manganese producer.
Highlights
- Good demand from the European market:
According to a few Indian silico manganese exporters, the European market is in severe short supply of silico manganese, and is willing to pay much higher prices for booking the shipments.
Meanwhile, few separate deals, cumulatively amounting to around 1,800 t of 65-16 grade were closed for the European market at $1,520/t, since late last week. This boosted the sentiments of the Indian exporters. A few merchant exporters are also looking at the Raipur market for procuring material to cater to the export market, driving up sentiments further.
- Indian market under spotlight for exports:
After Malaysia extended its lockdown, inquiries in the Indian markets have increased. Although there is still some reluctance from Japan and Taiwan with regard to the higher prices, the exporters are little concerned as the majority of them are now offering Sept-Oct’21 shipments. Exporters said that, for Asian countries, the deals are at around $1,450-1,480 FoB, while this week, a deal was also concluded at around $1,500 FoB for Oct shipments.
- Domestic buyers accept higher prices
The Indian domestic market has accepted the higher prices, driven by panic over supply issues. A major tender was settled at around INR 1,00,000/t exw this week, which has fuelled optimism amongst the producers.
Regular buyers are procuring in small lots as the prices are much higher and the current downstream steel sentiments are not supportive. Most of the producers reported a good number of deals at around INR 100,000/t ex-Raipur and Durgapur.
However, a few deals also happened at lower prices but mostly in the trade segment.
Meanwhile, in the SAIL CFP auctions of silico manganese fines, which were concluded on 15 Jun’21, prices went up by INR 8,500/t, which might further boost sentiments among Indian manganese alloys smelters.
- Higher profit margins helping to leverage negotiations
The current production cost of silico manganese is still ruling at around INR 65,000-70,000/t, depending on region and the power cost. Thus, the producers are getting extremely high profit margins after a long time. However, the higher profit margin is also having a cascading effect on the market, as many producers and traders are willing to sell off their material at lower offers, which could possibly break the market.
“Currently, the market is extremely bullish, but very small lots are also available at lower prices from producers in need of cash. The profit margin is still very good even if the seller agrees to sell at INR 2,000/t lower than the market price. Though there is no option for bulk orders in the domestic market, it might have some effect on the increasing prices,”, a producer in West Bengal said, sharing his concern with SteelMint.
Outlook
Manganese ore prices are not expected to increase due to the subdued Chinese demand, and the increased export tariff from China. These two factors will support the Indian market.
As prices increase to record levels, producers are now in wait-and-watch mode and cautious about price movements.
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