Indian silico manganese prices fall sharply as demand wanes

Indian silico manganese prices have been seeing a continuous downtrend since end of last month. The prices fell by around 10% in the domestic and exports markets.
SteelMint assessed the prices of silico manganese in Durgapur at around INR 102,375/t, with some traders offering even lower.

Meanwhile, Raipur and Vizag offers are at around INR 107,000 and INR 102,000/t exw respectively. Export prices fell by around $200/t from the start of the week to $1,700/t FOB India.

Why are prices dropping?
There are a confluence of factors triggering the incessant fall in the prices of silico manganese.

• Lower export demand
  
  

Due to the consistent fall in silico manganese prices, the major importers are now in wait-and-watch mode as they expect prices to decrease further. Most of the European participants are already covered till January and thus are in no haste to buy in the downtrending market. Earlier, inquiries from China had fuelled the optimistic sentiments in the Indian market, resulting in the hiked prices. But, with the improved production in China, demand from this country is waning .

• Increased supply in domestic market
  
  

Higher profit margins in manganese alloys have lured many ferro chrome smelters in the Durgapur belt to shift to its production. In addition to this, some major companies have restarted their production in the country, creating a situation of domesstic oversupply for the 60-14 grade.

• Falling steel prices
  
  

The inflated prices of silico manganese were earlier supported by the higher steel prices. However, the semi-finished steel prices are weakening on increased inventory with the mills. This scenario is also backed by the trade discounts given by the finished steel mills on the end-products. Thus, sellers are now aggressively lowering prices in the domestic market. Steel prices went down by around INR 1,700/t w-o-w, further denting ferro alloys demand.

• Falling Chinese futures
  
  

Chinese silico manganese futures on the Shanghai Futures Exchange (SHFE) tumbled on increased production and alleviated energy restrictions in the country. Prices in Inner Mongolia are at RMB 9,550/t ($1,494/t) exw for the 65-17 grade, which is down by RMB 1425/t ($223/t) w-o-w. However, market participants expect prices to fall further on declining steel prices in China.

Outlook
Major market participants believe that prices may correct further due to lower demand. They also remain confident about prices regaining their momentum as they wait for the major government tenders to conclude in the coming weeks.