India: Silico manganese prices drop to 16-month low on subdued demand

Silico manganese prices in the domestic market continued to fall on a weekly basis since the middle of July 2022 due to domestic and export demand deficit.

In line with the continued fall in world crude steel production, prices have fallen to their lowest level in 16 months. The Worldsteel Association reports that global crude steel production decreased by 5.5% in January-June 2022 to 949 million tonnes (mnt), down from 1.003 billion tonnes (bnt) in January-June 2021.

In addition, manufacturers of silico manganese are struggling with both cost and demand pressure. There is the possibility that manufacturers might reduce production at some point in the near future.

As per SteelMint assessment on 25 July, Raipur-based producers offered silico manganese at INR 77,900/t exw, a decrease of INR 2,900 /t w-o-w, while prices in Durgapur dropped INR 1,900/t to INR 78,900/t exw.

Responding to overseas enquiries, exporters offered 60-14 grade material at $980/t, down $50/t. Prices of 65-16 grade fell by $65/t at $1,085 /t FOB India. SteelMint recorded trade volumes of around 10,000 t this week.

Why silico manganese prices are subdued?

• Weak demand in the domestic and overseas markets has negatively impacted silico manganese prices.
• Indian steel producers have been impacted by price volatility and balancing raw material costs with sales prices has exerted selling pressure on them amid low demand. Silico manganese prices were impacted by weak steel market sentiments.

  Furthermore, the downtrend in silico manganese prices has affected the price of manganese ore.

China market overview
Silico manganese (60-14) prices in China were stable at RMB 67,00/t ($ 990/t) exw-Inner Mongolia, while the 65-17 grade was down by RMB -200/t at RMB 7,300/t ($1,079/t) exw-Inner Mongolia. Continuous stoppage and reduction in production of ferro alloys owing to low enquiries led to lowering of silico manganese prices.

Meanwhile, silico manganese futures on the Zhengzhou Commodity Exchange (ZCE) for September delivery were stable w-o-w to settle at RMB 7,142/t on 26 July.

Outlook

Weak seasonal demand during monsoon is likely to adversely affect downstream market demand. Furthermore, some silico manganese manufacturers have reduced production volumes in order to reduce inventory load. Hence prices are expected to remain subdued.