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Imports up 55% m-o-m in Feb
- Manufacturers increase production in anticipation of rise in alloy prices
- Bulk bookings expected to tackle supply crunch
Morning Brief: India’s manganese ore imports rebounded in February 2024 as total volumes increased by 55% m-o-m to 0.45 million tonnes (mnt) from 0.29 mnt in January, data maintained with BigMint show. It may be recalled that imports had dropped to a 1-year low in January.
However, in general, India has imported manganese ore in quantities consistent with its standard import levels every month. Hence, the increase observed in manganese ore imports in February was not an extraordinary rise; it is merely a result of the decrease in imports in January. In fact, the increase in imports occurred on a low base.
Country-wise imports
Exports of manganese ore by South Africa to India, which comprised a leading share in the total volumes, increased by 56% in February 2024 to 0.25 mnt as against 0.16 mnt in January. Imports from Gabon surged 54% m-o-m to 0.20 mnt in February compared to 0.13 mnt in January.
Why manganese ore imports increased?
Prices fall sharply: Monthly average prices of manganese ore have fallen steeply, as assessed by BigMint. For instance, prices of Mn 37% lumps imported from South Africa fell to a 4-year low of $3.68/dmtu in December 2023. In contrast, in February, prices stood at 3.95/dmtu which showed an uptrend. Mn 44% lumps of Gabon-origin were at their lowest point similar to December 2020 prices. The December 2023 price was at $4.32/dmtu, while Australian lumps of Mn 46% were also at the bottom and stood at $4.68/dmtu. Similar levels had been recorded in August 2020 ($4.64/dmtu).
Restocking in expectation of price recovery: As a result of falling imported manganese ore prices, manufacturers of manganese alloys felt that prices had bottomed out and would start increasing soon. Thus, manufacturers increased production twofold in anticipation of future increases in ferro alloy prices. Silico manganese (60-14) prices saw a significant INR 3,000/t ($36) m-o-m increase to INR 67,800/t exw Raipur in February compared to INR 64,500/t in January. Domestic silico manganese prices rose to a 4-month high in early February on improved enquiries for exports and domestic demand leading to supply tightness.
Concerns over inventory depletion: Key producing countries like China saw a drop in spot inventories because of a decline in domestic production amid tepid steel demand. China’s domestic consumption of manganese ore shrank in February, as many silico manganese smelters conducted maintenance or slowed their smelting pace due to losses.
Sensing trouble, Indian buyers booked in bulk to minimise the risks of supply crunch as demand for steel is expected to gradually pick up from the fourth quarter. Bulk buying also prepared them to hedge against a rise or volatility in ore prices. Also, there were concerns of freight increase amid the Red Sea crisis.
Domestic production: India’s manganese ore production increased to 0.3 mnt in January 2024 after 0.2 mnt and 0.29 mnt in October-November 2023.
Meanwhile, y-o-y, manganese ore imports in FY’24 showed a 19% increase to 4.96 mnt against 4.18 mnt recorded in the same 11 months of last fiscal year (FY’23). Volumes are likely to increase in March on the back of increased production of manganese alloys players amid rise in prices and expected demand recovery considering fiscal year end and pre-election mood.
Outlook
Domestic manganese ore production is expected to remain at current levels, likely meeting the existing demand. Imported ore volumes may not see significant growth compared to the previous year.
However, the future of import prices is uncertain. Several factors could lead to a price increase for imported ore like producers facing difficulties in transporting ore to ports, potentially impacting supply and driving prices up. In addition, South African producers are anticipating a rise in electricity tariffs from April 2024, which in turn could increase production costs and ultimately higher import prices for India.