Indian bulk ferro alloys prices have been increasing gradually to reach a historic high in the first half of CY’21, mainly due to supply shortage. Manganese alloys prices have been increasing since Jan’21. Currently, prices for (60-14) silico manganese are at a sky-high of INR 100,000/tonne (t) and HC ferro manganese (HC70%) are at around INR 99,500-100,000/t. Ferro silicon prices surged to INR 140,000/t exw-Guwahati in Jun’21 owing to supply constraints. Ferro chrome prices rebounded to INR 97,000/t after a slight dip in May’21.
Manganese alloys prices increased significantly q-o-q amidst strong demand and severe supply shortage in Q1 CY’21. Although, a drop in prices was seen at the end of Apr’21, due to muted demand from steel industries on oxygen shortage, because of the Covid surge, Prices started to pick up from the second week of May’21 after producers faced labour issues.
In addition, around 10,000-15,000 t/month material was out of the spot market due to various government and private bulk tenders, which further fuelled supply concerns in the market. By the end of May’21, demand from South-East Asian and European countries picked up in line with supply shrinkage. Due to production constraints in Ukraine and Malaysia, most of the importers sourced material from the Indian market, which supported the smelters to increase the prices of silico manganese. European buyers were willing to procure and stock up inventory for the upcoming quarters to mitigate the ongoing crisis of containers and production cuts. Thus, major Indian exporters got overbooked till Sept ’21 and are currently offering for Oct-Nov ’21 shipments, pushing up prices further.
Ferro silicon prices marked a significant increase due to supply shortage in Bhutan and Meghalaya. In Meghalaya, producers with no captive power plant had to cut their production due to uncertain power supply conditions. Bhutan producers faced severe labour shortages due to border closures. Moreover, dispatches remained affected due to the unavailability of transportation owing to the lockdown in various parts of the country. As a result, they could not make much profit from increasing global prices.
Due to the higher prices, most of the buyers chose to procure small volumes through immediate dispatches. Demand from the export market, especially Europe, increased, but sizing issues and container shortages kept Indian and Bhutan producers away from exports.
At present, producers are optimistic that prices will remain firm owing to supply shortage and a strong international market.
Ferro chrome prices increased in H1 CY’21 with minor depressions in between. At the beginning of the year, prices spiked substantially owing to a severe supply shrinkage in China due to stricter environmental policies. Later, due to increasing prices of manganese alloys, many small ferro chrome producers shifted to silico manganese and others reduced production owing to costlier raw material. However, due to increasing ferro chrome prices, demand in the domestic and Chinese markets declined slowly on expectations that prices may take a favourable turn.
The increased production in the southern provinces of China influenced the mills to focus on the domestic market. Although demand from the European market is good, due to constrained supply, container shortage and export tariffs, producers are more focused on the domestic market. After the first half of May’’1, prices of ferro chrome registered an increase due to lower production and limited suppliers in the country.
Outlook:
The supply-demand mismatch drove prices to substantial highs. It is expected that the market will remain strong in the next quarter amidst supply worries and a bullish international market.
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