Indian silicomanganese prices rise to a twelve-year high on the back of supply crisis in the domestic market. SteelMint learns from market sources that this is the highest silicomanganese prices have reached since 2008, however, this time around the prices are expected to remain firm in the immediate future as they are mostly governed by a supply crisis.
The price increase is a result of a confluence of factors that are stated below:
- Increased supply crunch in the domestic market
Prices remain scattered and are completely dependent on inventory levels with the producer. The producers in Raipur, Durgapur and Vizag all are offering at INR 79,000/t ex-works. Few producers in Raipur are also quoting higher as they don’t have enough material to cater to the domestic demand. Meanwhile, few deals yesterday have been concluded at INR 78,000/t both in Raipur and Durgapur.
- Increased Manganese ore prices
Imported manganese ore prices increased by around 6% w-o-w owing to increased prices from the South African miners to China. Meanwhile, road transport and shipments still remain affected in South Africa. Many consignments are delayed for a month or more. In addition to that, increased prices of silicomanganese in the global market have boosted the sentiments of manganese ore miners. There is an expectation in the market that the prices of domestic manganese ore might also increase in the upcoming weeks.
- Steel Prices supports silicomanganese sentiments
Steel Prices are relatively stable as compared to last week, which also boosted the sentiments of Silicomanganese producers. Although, there have been slight adjustments since last week yet producers remain firm, as they believe that there is a limited inventory with the buyers owing to the aggressive bidding from the induction furnaces. Meanwhile, the buyers hold a wait and watch approach as they are avoiding bulk orders due to the higher prices.
- Export market, not the only driving force anymore
Increased demand from the exports market was the sole reason for price escalation. However, the scenario has changed now, as the number of inquiries is heading back to normalcy again. It is expected that once the contracts for the second quarter is finalized, there can be some slight corrections in the market. Currently, most producers are already booked and are catering to the pre-existing orders which might keep the market strong till the end of the month. Meanwhile, demand from the export market also varies region-wise, as the Japanese inquiries are higher but are unwilling to buy at these prices, meanwhile, the same price is easily absorbed in the European market. However, the hassle of logistics and increased prices is a detrimental factor in the market.
- Outlook
Prices are expected to be corrected but not near time soon, as producers hold a stronger hand in negotiations. However, Raipur producers are also waiting for the MOIL prices, as they hope that if they increase the prices, it can give additional support to the silicomanganese prices.
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