India: Silico manganese prices continue hitting record highs amid China curbs

Indian silico manganese prices are continuing to hit record highs on a weekly basis as producers are taking advantage of the Chinese production cuts. This has resulted in a great mismatch in prices in the global silico manganese market.
Producers have been constantly increasing rates whenever they have been sensing good demand, in an attempt to maximise profits.

According to SteelMint's assessment, Raipur's prices for silico manganese hit another all-time high this week at INR 126,400/t exw.
In comparison, Durgapur producers, going into the festive period, have offered lower at INR 122,900/t exw . Raipur producers are willing to take as many orders as they can whereas, some Durgapur-based producers, who failed to attract customers, are offering even lower, at INR 119,000-120,000/t exw.

Impact of rising steel prices

Steel prices in India picked up by around INR 2,500/t since the last few days. This has enabled the silico manganese smelters to raise their offers further. Although buyers are reluctant to purchase in larger quantities, sellers remained firm with their high offers.

Coal shortage impacts power supply

According to sources, the shortfall in coal supply to the non-power sectors also resulted in silico manganese prices gaining new highs. Captive power plants played a major role especially for leading producers . This is one of the major reasons for the price hike in silico manganese. On the contrary, producers who get power from the grid have been better placed in terms of margins.

According to the coal ministry's data, Coal India Limited (CIL) supplied around 8.04 million tonnes to the non-power sector in Sept '21 - a significant fall of 21% m-o-m as compared to August. If the coal crises prevails, smelters might shift their interests from captive power to grid supply.

Global production cuts leading export demand

Many silico manganese smelters have reduced their production due to high electricity costs. This may result in material shortage worldwide. On the other hand, India's production is on in full volume. Producers have not faced difficulty yet. So, there is adequate inventory in the Indian market which may attract importers in the coming weeks. As a result, sellers are expected to effect a further hike in silico manganese prices.

One of the leading producers told SteelMint, "The increasing demand in the spot market may take silico manganese prices up to INR 140,000/t levels soon."

Outlook

The present scenario of high prices of coke and coal shortage but good demand despite historically high prices, may further hike silico manganese prices.