Tuesday, Aug 09,
MOIL Ltd, India’s biggest manganese ore producer, sees a tight market for at least two to three years.
KJ Singh, chairman and managing director, that while the price of manganese ore has fallen by almost 43%,eroding the company’s sales and profitability numbers, there are chances that the price may even go down further by another 6-7% before bottoming out.
There is a global demand of 35 million tonne for the ore while the production has been close to 47 million tonne. This has led to an oversupply situation in the global markets and a sharp downward correction in the price,” he said.
The steel sector is the biggest consumer of manganese ore and the growth of steel production and demand has a direct impact on the demand and prices of manganese ore. To produce a tonne of steel, 35 kilogramme of manganese ore is required.
Lsst fiscal, steel production grew by 16% and 6%, globally and in India, respectively. In sharp contrast to this, manganese ore production grew by a whopping 33% world wide and 22% in India, causing an oversupply of manganese ore with a serious impact on prices.
Besides, with only 2% import duty in India, several private players resorted to import of manganese ore at more or less the same price, and hence affecting MOIL’s profitability.
Singh said while tight market conditions will continue to dog the sector for at least two years, once the greenfield and brownfield steel projects start coming on-stream, the situation will improve once again.
MOIL, as part of its forward integration plans, is setting up two ferro alloy plants with a total capacity of close to 1,60,000 tonne per annum. While for one plant the company has tied up with SAIL and setting it up in Bhilai, and for the other it has tied up with RINL for a plant in Vizag. Both these plants are expected to come on-stream by CY 2013.
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