India: Manganese ore imports show modest decline m-o-m in April'24

India manganese ore imports fell slightly by 8% to 0.45 mnt in April 2024 as against 0.49 mnt in March.

However, imports in April rose by 18% y-o-y to 0.45 mnt against 0.38 mnt in April 2023.

Country wise imports: South Africa remained the largest exporter with 0.24 mnt followed by Gabon (0.16 mnt) and Australia.

Factors behind fall in imports:

South Africa delays deliveries: Transnet's rail network has not been able to keep pace with manganese exports, forcing producers to truck a significant portion of their supplies to ports. South Africa, the world's largest manganese ore exporter, shipped 22.4 million wet metric tonnes (wmt) last year. Of that, around 6.2 million wmt, or nearly 30%, was trucked, which was not economical for ore producers and which led to delay in delivery by 2-3 days due to lack of developed infrastructure.

Lower crude steel output: Crude steel production fell by 6.2% m-o-m to 11.918 mnt in April from 12.709 mnt in March. Moreover, production displayed a y-o-y growth of 2.4%, surpassing 11.641 mnt produced in April 2023.

India's steel exports in April hit their lowest in five months. Volumes dropped to a provisional 0.66 mnt. In November 2023 exports had touched 0.32 mnt, BigMint data show. M-o-m, volumes fell by 35% compared to 1.01 mnt in March.

Lower silico demand: The domestic manganese alloys market remained soft with a downward trend seen in prices for silico-manganese and ferro-manganese due to tepid demand for exports. Many steel mills in Europe, Japan and South-east Asia have reduced their manganese alloys intake amid sluggish steel demand. Despite the sluggish overseas demand, many manganese alloys producers continued to operate at low capacity of 25-35% during February and March.

Some producers have shifted to low carbon, low silica content and niche alloys production in an attempt to reduce their dependence on buyers of bulk alloys.

Meanwhile, many in the market expect a slowdown in domestic demand for manganese alloys during the general election period. "This will likely restrict government spending on infrastructure projects and slow down steel demand in the country, which will curtail the demand for manganese alloys at least till May," sources informed.

High domestic manganese ore production: Domestic manganese ore production increased which reduced dependence on imported volumes. In April, Manganese Ore India Limited (MOIL) achieved a record-high production of 0.16 mnt of manganese ore, marking a 22% y-o-y increase. This remained its best-ever production for the month. Additionally, its sales figures reached 0.11 mnt in April, up by 17% y-o-y.

Managing inventory : February and March being fiscal year-end months, smelters in key markets curtailed production volumes, tailoring output to market demand and sentiments.

Near-term outlook

In the current scenario, Indian manganese ore import volumes are anticipated increase in the near term, as Indian smelters had booked bulk quantities earlier apprehending supply shortage and further rise in global ore prices.

Furthermore, a derailment in Gabon, the world's second-largest manganese producer, is disrupting supply. Repairs could take weeks, and South32 has delayed exports until Q1FY'25. Silico manganese futures have surged reflecting market anxiety over a potential supply gap. This disruption, coupled with South32's delay, could push manganese ore prices higher, impacting manganese alloys production costs.