India: Silicomanganese prices down; Oxygen supplies and lockdowns intensify the market ambiguity

Indian Silicomanganese market had witnessed a sharp rise in prices last month after overseas demand picked up. Thereafter, most of the exporters remain booked in April and were unable to dispatch any additional material in the spot market.

Although the situation still remains somewhat similar, with few producers still out of the spot market due to abundant orders in hand, yet the prices have come under pressure.

There are a confluence of factors behind this pessimism in the market:

Durgapur producers catering more to the domestic market
Durgapur belt producers are now allocating more material to the domestic market. Many producers are now going into panic mode and reducing the prices of silicomanganese amidst higher selling pressure. Current offers from Durgapur stand at around INR 87,000-90,000/t Ex-works, while most deals are being concluded at around INR 87,500-88,000/t.

Raipur producers are wary of Durgapur material flooding the market
Raipur producers, who were already hit by the lockdown-led labour shortage now have to deal with material being flooded from Durgapur in the Raipur region. Thus, they are forced to match the levels to keep the sales going. Meanwhile, according to sources, many smaller induction furnaces in Chhattisgarh and Maharashtra were either shut down or facing severe production cuts due to oxygen shortage. Thus, the demand for silicomanganese remains affected. Currently, offers are at around INR 87,000-88,000/t ex-works in Raipur.

Meanwhile, falling prices of silicomanganese is also a matter of concern for the government tender winners as they remain anxious if the PSUs call for readjustment in the tender prices before the purchase orders are released.

Overseas demand lowers to normal levels
The overseas demand is now back to normalcy after Ukrainian exports resumed for European countries. Therefore, the Indian exporters are mostly dependent on the Southeast Asian countries for their exports and they are negotiating for lower prices. However, prices are rangebound at around $1,200/t for 60/14 grade and $1,300/t for 65/16 grade FOB.

Uncertainty over oxygen availability
"As covid cases continue to increase in India, the country is facing a shortage of oxygen. Although a fraction of Industrial oxygen has been shifted for medical usage, it doesn't seem enough and any decision about shifting all of the supply to medical units is just around the corner", a producer of silicomanganese shared his concern with SteelMint.

"Given the uncertainty about the steel production in the coming days, buyers are now cautious about procuring more material and are ordering only to cater to the current production and are avoiding building inventories. Meanwhile, this is also a matter of personal choice as few buyers are also trying to build inventory, in an anticipation of lockdown in their area, so they do not have to deal with the problems of dispatches during the time.", remarked another producer.

Overall, there is uncertainty in the market and most of the market participants are unable to predict the future pricing trend.