India: Silico manganese offers surge, further steep hike less likely

• Prices surge on tight supply in domestic
  
  
• Silico manganese producers grapple with cost pressures
  
  

Silico manganese domestic prices in India witnessed an increase this week. Grade 60-14 prices rose by INR 1,400-1,800/t ($13-22/t) w-o-w to settle at INR 68,300-69,100/t exw ($821-830/t) in key production regions as per BigMint's assessment 9 April, 2024. The premium-grade (60-15) reached INR 67,500-68,500/t ($808-819/t) exw in Durgapur and Raipur. Today, Raipur players have increased offers to INR 70,500-71,000/t exw($845-851/t), with limited deals getting reported.

Silico manganese prices were experiencing a robust upward trajectory in the domestic market, fueled by a confluence of supply and upward price movement in domestic steel.

"We are experiencing an increase in pricing because of imported manganese ore prices. Silico manganese export demand is still subdued, but we anticipate significant demand in the near future", cited a silicon manganese player in central India.

Factors fueling domestic price

Escalating raw material costs and squeeze margins:Rising prices of key raw materials, particularly domestic and imported manganese ore, are driving up production costs for silico manganese producers. In Raipur, for example, production costs currently hover around INR 67,500-68,000/t ($810-815/t), squeezing margins at current market prices. This cost pressure is likely to translate into upward pricing adjustments in the near future. Also, imported manganese ore prices have risen this week. Towards end of March, South32 withdrew its FY'24 forecast for Australian manganese output of 3.4 wmnt due to tropical cyclone Megan's impact on their GEMCO unit.

Supply-side bottlenecks: The current market environment is characterized by limited short-term supply. Most domestic producers are already booked for deliveries until mid-May 2024, leaving limited material available in the spot market. Moreover, some producers are strategically holding off on raising offers, anticipating further price hikes. This cautious approach further restricts spot market availability.

Indian silico manganese exports price stable w-o-w: Indian silico manganese exporters are stuck in neutral. BigMint's assessments on 9 April, 2024, reflected this stability, with the 60-14 grade remaining unchanged at $818/tonne (t) FOB and 65-16 holding steady at $917/t FOB. Major producers in Vizag and Raipur continued to offer the SiMn 65-16 grade at a FOB range of $915-$920/t. Subdued global demand has acted as a headwind for exports, leading to price stagnation in the market.

Hike in billet prices w-o-w: BigMint's daily steel billet index was assessed at INR 42,700 /t ($511/t) (up by INR 900/t w-o-w) exw-Raipur on 10 April 2024. This, in turn, fuels the price of silico manganese, a key alloying element in steel production.

Outlook

Given rising raw material costs, high operating rates, and limited supply is likely to continue supporting upward pressure on silico manganese prices in the near term. However, significant hikes is less likely given the drop in domestic steel prices seen this week.

Close monitoring of domestic steel demand trends, producer material quotes, and global supply dynamics will be crucial for assessing the future price trajectory of silico manganese.