India: Domestic silico manganese prices surge on rising raw material costs

• MOIL announces a price hike for manganese ore effective from June'24
  
  
• Rising power costs to squeeze profit margins for Raipur producers
  
  

Domestic silico manganese prices across key Indian regions experienced a significant rise on Wednesday. This surge reflects a w-o-w increase of INR 9,300/t (approximately USD 117/t) compared to the assessment ending 29 May, 2024. The primary driver behind this price surge is a recent escalation in raw material costs.

BigMint's assessments on 5 June revealed a w-o-w increase in prices by INR 9,100-9,600/tonne (t) ($109-$114/t) for the key 60-14 grade silico manganese. Prices of this grade were assessed at INR 92,700-93,800/t ($1,110-$1,123/t) exw. Notably, offers in Raipur were even higher, reaching INR 93,000-95,000/t ($1,114-$1,138/t) exw.

Market overview

MOIL hikes manganese ore prices by up to 35% for June: MOIL, India's state-owned mining company, has announced a price hike for manganese ore effective from June 2024. Mn grades above 44% have witnessed a 35% growth in offers m-o-m, while lumps below 44% have increased by 30%, BigMint learned. Notably, the miner had raised offers by up to 40% last month for May, 2024 deliveries.

Imported manganese ore prices jump 33%: The price of Mn ore 37% pricing of South African origin increased by 33% m-o-m to $6.45/dmtu in the first week of June 2024, from $5.1/dmtu in the same week in May 2024. Manganese ore prices saw a dramatic 34% increase to $9/t in June 2024 for origins other than Gabon (44%) and Australia (46%) compared to $6.6/dmtu in May 2024 and $8.45/dmtu in June 2024, which was $6.2/dmtu in May 2024.

Rising power costs to squeeze profit margins for Raipur silico manganese producers: Silico manganese producers in Raipur are bracing for a potential squeeze on profit margins due to a rise in electricity costs effective 1 July, 2024 in financial year 2025 (FY25). The state government's recent announcement of a INR 1.25/unit surge in power tariffs (including a combined effect of increased charges for 33 kVA and removal of rebates of 25% for 132/220 kVA) is expected to translate into an estimated cost increase of INR 4,000-5,000/t for some of the producers. However, the majority of the players having captive power plants are able to manage the tariff hike.

Export offers rebound on rising ore prices: Indian silico manganese export offers jumped $58/t this week due to rising import ore costs and domestic supply tightness. Exporters cautiously navigate this opportunity amid potential global demand shifts and ongoing supply chain disruptions. BigMint data show increases: 60-14 grade up $53/t w-o-w to $1,121/t FOB, 65-16 grade up $58/t w-o-w to $1,238/t FOB. Major producers in Vizag/Raipur offering SiMn 65-16 grade at $1,240-$1,250/t FOB due to surging ore prices.

Outlook

A recent rise in global manganese ore prices casts a shadow of uncertainty on the near-term outlook for domestic silico manganese prices. While a potential increase in domestic silico manganese prices appears likely, the long-term impact on the market remains unclear.

Rising manganese ore, exerts upward pressure on production costs for domestic silico manganese producers. This could lead to price adjustments in the near term to maintain profitability.

The ultimate impact on silico manganese prices will depend on overall market demand. Robust demand could allow producers to pass on some cost increases. However, weak demand could force producers to absorb some of the cost increases or risk margin erosion.