India’s largest manganese ore miner revised manganese ore prices higher by 10% m-o-m for Sep’20. The Silico manganese producers from Raipur were speculating that MOIL might increase the prices in line with limited production. The production levels have suffered drastically since lockdown and the effects are prolonged.
Production down by 58% y-o-y in Q1 FY21:
Manganese ore production reduced by about 58% y-o-y in Q1FY21, from 3.18 lakh tonnes in Q1 of last year to 1.34 lakh tons in Q1FY21. This drastic reduction started since the imposition of nationwide lockdown in Mid-Mar’ 20. Full lockdown in April and May with fractional relaxations only for safety-related works with other operating norms resulted in a reduction of the production by 83% y-o-y in Apr’20 and 58% y-o-y in May’20.
Sales dropped by 49% y-o-y in Q1FY21:
Manganese ore sales dropped owing to the COVID effect, and lower offtake due to lesser export quantities that also resulted in partial to total shutdown of many ferro alloy units, who are the major buyers for MOIL. the sales have dropped sharply to 1.45 lakh tons in Q1FY21 from 2.84 lakh tons Q1FY20.
However, the average sales realization has increased marginally by 5% from INR 9,324/t Q1 FY20 to INR 9,810/t in current year. Manganese ore volume declined as mines were closed in April 2020 due to COVID-19-led lockdown. The consecutive upsurge in realizations was on account of price hikes undertaken in May 2020. The collective effect was a reduction in turnover by 46% y-o-y to Rs. 152 Cr in Q1FY2021 as against 280 Cr in corresponding period with a significant reduction in operational profit to 26 Cr as compared with 91 Cr.
Outlook:
The production levels of MOIL is expected to continue at 75% of that in previous year. Meanwhile, there is an expectation that the market will pick up in the next quarter., viz Q3 FY21. However, the supply concern might rule the pricing dynamics for now.
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