India's manganese ore imports hit one-year low in Jan'24; but short term looks positive
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- Slack steel demand impacts silico manganese prices
- Red Sea crisis pushes up voyage time, freight rates
- Tight Malaysian SiMn supply to benefit India smelters
Morning Brief: Indian's manganese ore imports dropped by 44% m-o-m to 0.29 million tonnes (mnt) in January 2024 against 0.52 mnt in December 2023. The last time similar levels were seen was in February 2023.
However, volumes increased by 16% y-o-y to 4.51 mnt in the first 10 months of financial year 2023-24 (FY'24) compared to 3.89 mnt recorded in the same period in the preceding year, reveals data maintained with BigMint.
Country-wise break-up
South Africa is the largest exporter of manganese ore globally and its sales to India totalled 0.16 mnt in January 2024. Gabon followed with 0.13 mnt. Rest of the destinations which usually export to India were markedly absent in January.
Reasons behind the m-o-m steep fall
Smelters avoid bulk bookings amid tepid steel demand: Indian smelters avoided bulk bookings in Nov'23 amid sustained limited demand for steel. Major producing regions like Raipur, Durgapur, and Vizag reduced output by 50% to minimize the risk of losses and oversupply in the domestic market. Prices of silico manganese (SiMn), an end-product of manganese ore, in Vizag dropped to a three-year low in November 2023 of about INR 63,240/t ($765/t) exw amid limited demand and surplus supply. On a m-o-m basis, November 2023 prices fell 4% compared to October's INR 65,840/t ($796/t). Silico manganese is used as a de-oxidiser and alloying agent in steel-making. Its prices fell because of the low demand for steel.
Silico manganese importers move to sidelines: Silico manganese importing countries like Japan, Italy, Egypt, the UAE, and Southeast Asia evinced less interest in the material as they anticipated a further fall in prices since imported manganese ore prices were volatile in an already tepid steel market. Thus, smelters moved to the sidelines, keeping bulk bookings on hold.
Exporters hit by extended voyage time, freight hikes: Indian exporters faced container shortages at ports due to the re-routing of shipments because of the Red Sea crisis. Voyage times have increased by 10-15 days since the crisis began. Delaying shipments are causing container shortages.
Plus, there has been a steep hike in freights by $3,000-4,000 per container (which is a 5-6-fold increase) for moving material to the European sector.
Slack steel demand hits silico manganese offtake: The subdued demand for steel globally also hit silico manganese exports from India. Steel production in the 71 countries reporting to worldsteel inched down 1.6% y-o-y in January 2024.The European market did need-based buying of silico manganese amid the festive season, energy inflation and slow domestic steel demand. This weighed on Indian silico manganese prices, both in overseas and domestic markets which in turn impacted the demand for ore.
Logistics challenges in SA: South Africa and Zambia faced logistical issues have which led to lower goods movement although these have been smoothened out to some extent. However, theft, vandalism and poor management of rail systems in South Africa have been impacting movement of all dry bulk commodities, including manganese ore.
Major miners in SA face supply hurdles: Key smelters from Durgapur informed BigMint that major miners from South Africa faced supply hurdles because of maintenance shutdowns, amongst other reasons. As a result, ore supply dropped sharply in November.
OutlookIndian manganese ore imports may increase in the short to medium term because of a few reasons. One, smelters may be keen to secure material across grades before any potential price increases.
Secondly, prices of manganese alloys may increase as there is scope of their demand improvement in both domestic and export markets. Silico manganese prices have already showed an uptrend since end-January because of supply pressures from Malaysia, which have impacted importing geographies like Europe, Japan and Southeast Asia.
