India: Silico manganese prices slump amid rising inventory

Indian silico manganese producers have cut offers this week. Prices dropped mainly in Durgapur on 25 Oct’21 amid slow buying interest and high selling pressure. However, most of the producers in Raipur have kept their prices stagnant since last week-end, while some of them decreased offers slightly owing to muted inquiries in the market.

As per SteelMint assessment, prices of silico manganese fell by INR 8,300/tonne (t) to INR 127,300/t exw-Durgapur on 25 October as against prices on 23 October. However, the same in Raipur stood at INR 134,150/t exw with a marginal drop of INR 2,750/t compared to INR 136,900/t exw assessed on 23 October.

Factors behind fall in prices –

• Indian producers are reluctant on booking silico manganese at all time high prices. This forced smelters to reduce their offers.
• Owing to historic high prices, some producers have restarted production of manganese alloys. Meanwhile, some others are willing to switch their production from ferro chrome, which may result in oversupply in the spot market. Hence, sellers are concerned that prices may drop soon.
• Some Durgapur producers are struggling with liquidity crises owing to fewer sales which compelled producers to reduce their offers so that they could meet the monthly targets.
• Indian steel prices are also trending down owing to limited buying interest in line with softening raw material costs. This is also weighing on silico manganese prices.
• The export market is sluggish as many international buyers have booked material and have enough inventory for the year end.
• Chinese production restrictions in the main production area have been readjusted and the output of silico manganese has increased. As a result, prices declined by RMB 200-300/t ($31-47/t). Overall, an increase in production in line with a fall in prices of silico manganese in China compelled Indian producers to further reduce prices.
• Moreover, the silico manganese futures in China have witnessed a setback as most of the steel mills planned to postpone their purchases owing to strict environmental norms which are hitting the production of steel mills.

Outlook

Domestic demand of silico manganese is muted as steel mills are in a wait and watch mode. Moreover, easing Chinese power restrictions weighed on the sentiments. Market sources anticipate prices to remain stable in the coming week.