India: Silico manganese prices open on a positive note in Dec '20

Indian Silico manganese prices have been rising since past few weeks as shortage of 60-14 grade hit the domestic market. Many producers in India are already booked out and cannot deliver in the spot market creating a panic situation. Thus, the escalation in prices.

As the domestic-market accepted higher offer prices, the export transactions also saw a rise in prices. Market participants reported of healthy demand from the South-East and Middle-East Asian countries. Although, the current freight rates are a potential hindrance to exports, yet the prices are not expected to fall in the coming weeks from India as it is supported by strong domestic demand.

Current Assessments:
Ex: Durgapur: INR 61,000-61,500/t;
Ex: Raipur: INR 61,000-61,500/t;
FOB India (HC 60-14): $830/t;
FOB India (HC 65-16): $900/t;
However, producers with enough in-hand orders are also quoting INR 500/t higher than the above-stipulated levels. In addition to this, Indian suppliers are willing to concentrate more on the domestic market as the MEIS incentives are withdrawn, which also can be treated as a reason to increased prices in exports.

Global silico manganese demand:
Steel market production has been hit worldwide, which is enough to lower the silico manganese demand. Meanwhile, the European countries have also retreated from procuring in the spot market due to higher freight costs. There is a massive scarcity of vessels worldwide, clubbed with delayed shipments and increased transit time, which has created a panic in the market and prices have increased by up 3-times than the average freight levels and is expected to rise further.

Silico Manganese production dropped in Ukraine
As per the data from IMnI, in the first 10 months of the year, silico manganese production dropped by 21%, due to production cuts in Georgia, Kazakhstan and Ukraine. Meanwhile, Ukraine alone registered a drop of 31.4% CPLA. This drop in the production levels also resulted in their lower exports and affect the major importing countries of Ukrainian Silico manganese like Turkey, Italy and the Netherlands.

Turkish demand of silico manganese expected to pick up
Turkish buyers have become active and have floated inquiries for Jan '21 shipments. As the major exporter to Turkey is Ukraine, the imports from the country have suffered immensely due to production cuts in Ukraine. Therefore, the country is largely dependent on Europe for its requirements. However, it can't fulfil its complete requirement from European suppliers and the Turkish buyers are now looking to the Indian market for procurement. But, due to the increasing freight rates Indian exporters are offering silico manganese 65-16 at around $960-970/t CNF Turkey, which is $65/t higher than the FOB levels.

Outlook:
Prices of silico manganese are expected to be firm in the short-term. Meanwhile, it is expected that the imported manganese ore prices might further dip by around cents 30-40/dmtu in the coming weeks due to huge inventories at Chinese ports and weak buying sentiment. It is to be seen whether the falling manganese ore prices might have a counter-effect on the manganese alloy prices.