MOIL cuts manganese ore prices for Q2 FY21 to reduce stocks

Manganese Ore India Ltd (MOIL), the largest manganese ore producer in India, reduced prices by up to 15% with effect from 1 July for the July-Sept quarter.

Excess stocks with MOIL and the need to bring parity with seaborne prices, which fell sharply during the period May - June, were the key reasons for the 15% price cut.

Prices of ferro-grade manganese were reduced by 15% from June levels, silico-manganese grades (25% and 30%) were reduced by 10% while fines and chemical grades were reduced by 10% each.

The lockdown imposed on 22 March to control coronavirus in India led to shutdown of most ferro-alloy industries for nearly a month. Most of these companies were unable to restart normal operations immediately after the lockdown was eased due to labour shortage. This disruption slowed consumption of manganese stocks, reducing the need to procure additional stocks.

A 27% drop in South African carbonate ore prices since May influenced MOIL's decision to cut Q2 FY'21 prices, since buyers in India will likely buy more imported ores if MOIL's prices are higher. MOIL's had lifted prices in May by 45% m-o-m tracking a 40-45% gain in South African prices in April. South African prices were higher in April largely due to logistics disruption due to lockdown. MOIL's sales volume dropped by 71% y-o-y and 26% m-o-m in May as buyers mostly rejected the higher prices besides discontent about weight and quality of MOIL's ores. Additionally, most buyers were well-stocked with imported manganese ores.

Production of manganese ore in India was severely affected by the lockdown in the March-May period due to labour shortages. Requirement of trained labour for mines made it impossible to hire new workers during this period. MOIL's production of manganese ore in Apr'20 was at a record low in April, down by 79% M-o-M and 83% y-o-y at 16,000 t. Production in May'20 was down by 57% m-o-m at 45,000 t.