Domestic ore output rises but falls short of demand
Mn ore requirement rises on higher crude steel output
Decrease in global Mn ore prices boon for importers
Morning Brief: India's manganese ore imports in the first eight months (January-August) of calendar year 2024 rose by a considerable 38% y-o-y to 4.68 million tonnes (mnt) against 3.38 mnt seen in the corresponding period last year (CPLY).
South Africa continued to remain the largest sourcing country with volumes rising 33% y-o-y to 2.69 mnt. Gabon followed with 1.75 mnt, up 66% CPLY.
Grade-wise break-up
Lower grade ores gain traction: Notably, imports of manganese ore below 35% grade witnessed a significant 98% y-o-y growth to 1.47 mnt in 8MCY'24 compared to 0.74 mnt in CPLY. A focus on cost-containment might be driving the rise in lower grade ore imports, potentially due to volatile global manganese ore pricing.
Higher grade imports rise: Similarly, imports of higher grades in the 40% to 44% range experienced a substantial 68% y-o-y increase at 0.91 mnt (0.54 mnt) in the period under review.
Mid-range ore imports up: On the other hand, imports of mid-range ores (35% to below 40%) increased 10% to 1.39 mnt (1.27 mnt) in this period, suggesting a potential shift in buying strategies. The potential availability of domestic manganese ores in this category is possibly leading to decreased reliance on the imported mid-range.
Reasons behind spurt in imports
Domestic ore production rises but falls short of demand: Domestic manganese ore production increased by 12% y-o-y to 2.5 mnt in January-August 2024 against 2.2 mnt in CPLY. This was largely due to the increase in production from MOIL and local miners. However, this additional output fell short of meeting India's annual manganese ore demand of 8.5-9 mnt. Within this quantum, 5-6 mnt is imported.
Manganese alloys output up on improved crude steel demand: Manganese alloys production increased by 20% y-o-y to 3.6 mnt in these first eight months against 3 mnt seen in CPLY. An increase in alloys production naturally called for higher ore requirement. Alloys production increased on the back of higher crude steel demand and production. It may be noted, India's crude steel production rose 6.5% y-o-y to 98.5 mnt in 8MCY'24.
India still remains a bright spot in the global steel firmament with demand expected to show a healthy growth of 8.2% in 2024 compared to a global growth of 1.7%, according to the latest Short-Range Outlook of the World Steel Association. This positivity stems from the fact that the new Budget retained the infrastructure spend target unchanged at INR 11.11 trillion.
Manganese alloy capacity additions in key region: During January-August, 2024, key domestic manganese alloys production hubs like Vizag and Raipur increased their capacities. Vizag hiked its total capacity by 60-70 mva (with furnace sizes varying from 9-33 mva). These cumulatively have a capacity to produce 10,000-15,000 tonnes per month.
That apart, in Raipur, major smelters set up fresh 70-80-mva furnaces which require increased volumes of imported ore.
In fact, India's domestic manganese ore demand witnessed a significant rise during May-July 2024. This surge can be attributed to the expansion of smelting capacities in key regions like Vizag and Raipur.
Resultantly, demand for additional ore propelled increased manganese ore imports.
Global ore price drop favours imports: Imported manganese ore prices have seen a drop since early June, encouraging smelters to actively import the same. South African lump import offers have fallen steadily m-o-m since June 2024's $6.26/dmtu to $5.1/dmtu in July and further to $4.19 in August. In fact, earlier, from June 2023 till February 2024, prices had hovered at sub-$4/dmtu levels and then were in the vicinity of $6/tdmtu over May-June, 2024.
This overall price down-trending can be attributed to key global miners lowering offers amid weaker steel and manganese alloys demand.
Outlook
Given the current market dynamics, India's monthly manganese ore import arrivals may experience a marginal decline in September. The primary driver of this trend can be the subdued demand for manganese alloys - both domestically and in exports seen in August-September. However, fresh bookings are expected to regain momentum ahead of the peak steel demand season starting October and continuing till March-April next year.
