India: Silico manganese prices rangebound amid dull export demand

Silico manganese prices remained rangebound last week amid muted export demand. Profits of manufacturers have fallen of late, while some have gone for production cuts even as the procurement of raw materials has declined due to the monsoon, festive season and low inquiries from overseas.

As per SteelMint's assessment on 8 August, Raipur-based producers offered material at INR 76,500/t exw, down INR 500/t w-o-w, while prices in Durgapur remained stable w-o-w at INR 75,000/t exw.

Responding to overseas inquiries, exporters offered 60-14 grade material at around $955/t, down $5/t from last week. Prices for the 65-16 grade were assessed to have fallen by $10/t at $1,070/t FOB India. SteelMint recorded trade volumes at around 3,000 t in a weak market.

Factors influencing prices

• Silico manganese market saw low inquiries due to the monsoon season, which led to a decrease in steel production. This kept prices rangebound.
  
  
• Also, exporters were unable to secure bulk deals since seaborne buyers were willing to book material at much lower prices, which was unfeasible for Indian buyers. As a result, prices remained unchanged.
  
  
• Domestic steel market demand was subdued last week with limited trades and few inquiries. Downward trend in the Indian steel market kept prices of silico manganese rangebound.
  
  
• Prices of raw materials like manganese ore and coal declined marginally in the domestic markets to maintain the overseas price level.
  
  
• Electricity tariffs were revised for the Durgapur region by around 80-90 paise/unit and the revised tariff per unit is around 5.75 paise/unit. This might impact the cost of production of manganese alloys.
  
  

China market overview

Silico manganese (60-14) prices in China fell by RMB 300/t to RMB 6,400/t ($948/t) exw-Inner Mongolia, while the 65-17 grade was being offered at RMB 7,150/t ($1,058/t) exw-Inner Mongolia. Due to insufficient raw material demand, and the current price decline, silicon manganese's cost-side support remained continuously weak.

Additionally, silicon manganese consumption is down and the supply is low due to off-season. However, silico manganese futures on the Zhengzhou Commodity Exchange (ZCE) for September delivery down by 2% w-o-w to RMB 7,248 /t on .

Outlook

Prices have been rangebound for the past few weeks, but low overseas inquiries and the monsoon season are affecting trade demand. The overall market is expected to remain weak and might fluctuate nominally.

The price will increase only under the following conditions:
1. If the export demand picks up.
2. Production at some plants is reduced. Production cuts might result in shortage of supply on the market leading to price rise.
3. Demand for iron and steel rises.