Indian silico manganese prices reach a 2-year peak as ore prices surge

• MOIL raises prices by up to 40% for May
  
  
• High raw material costs put pressure on manganese alloys producers
  
  

The domestic silico manganese market has experienced a dramatic price surge this week. Prices have jumped a significant INR 13,700/t ($164/t) w-o-w compared to last week (ending 23 April, 2024). This marks the highest price point in two years, surpassing the previous peak observed in May 2022. Panic buying amid hike in manganese ore prices, both in the domestic and global markets, lifted offers.

BigMint's assessments on 30 April revealed a substantial w-o-w increase of INR 11,900-15,200/t ($143-$182/t) for grade 60-14 silico manganese. Prices for this grade were yesterday assessed at INR 83,700-88,200/t ex-works ($1,002-$1,056/t). Notably, offers in Raipur have climbed even higher, reaching INR 93,000-95,000/t ex-works ($1,113-$1,137/t), with some deals reported at even steeper levels.

The premium grade (60-15) has also witnessed a price hike, currently at INR 98,000-99,500/t ex-works ($1,173-$1,192/t) in Durgapur and Raipur.

Factors boosting prices

MOIL hikes manganese ore offers: MOIL, India's primary manganese ore producer, has raised May prices in response to soaring imported ore costs. High-grade ore (44% and above) has increased by 40%, while lower-grades (below 44%) have witnessed a 25% rise, potentially impacting domestic silico manganese prices.

Domestic producers, aiming to maintain price parity with imported ore, have implemented price hikes. High-grade ore (above Mn44%) has seen a substantial 40% m-o-m increase, while lower-grade ore prices have risen by 25%. This trend suggests a potential flow-on effect to domestic silico manganese prices in the near future.

Indian manganese alloys margins squeeze on surging input costs: Sharp increases in imported raw material prices, including ore, with lower-grade up by INR 1,700-3,800/t ($20-45/t) and higher-grade up by INR 6,200-6,500/t ($74-77/t) has squeezed margins. So production hubs like Raipur, Durgapur, and Vizag have been the most impacted, with production costs climbing to INR 12,500-20,000/t ($150-240/t) due to recent manganese ore price hikes.

A key producer from Durgapur said that significant reduction in high-grade manganese ore shipments from Gabon by about a third has disrupted high-grade ore availability for Indian steel mills.

Gabon is a crucial supplier of manganese ore to India, accounting for approximately 1.80 million tonnes (mnt) or 15% of India's total ore imports in FY'24. With reduced volumes from Gabon, coupled with India's already high import dependence (Australia contributes only 0.21 mnt), the domestic smelters might face challenges in securing sufficient high-grade ore.

Outlook

The recent surge in ore, vital for silico manganese production, is inflating production costs and prompting domestic price hikes. Potential disruptions in imported ore supply chains may further constrict global supply, driving up domestic silico manganese prices.

The long-term trajectory of silico manganese prices will depend on the evolution of cost pressure, including import costs of raw materials and potential changes in domestic production costs.