Category: Blog

• Manganese alloys production rises on capacity expansion
• Smelters restock ahead of elections, reap price benefits
• Higher crude steel output fuels Mn alloy demand

Morning Brief: India’s imported manganese ore volumes rose a sharp 29% y-o-y to 2.46 million tonnes (mnt) over January-May 2024 (5MCY’24) against 1.91 mnt in the same period last year.

Country-wise imports
South Africa remained the largest exporter over January-May 2024, with 1.42 mnt, showing an increase of 18% y-o-y. Gabon followed with 0.85 mnt, up 60% y-o-y, while Cote D Ivoire was in third place with 0.15 mnt, recording a humongous growth of 150% y-o-y but on a low base.

Grade-wise imports: A mixed trend
The grade-wise break-up throws up a mixed trend. This was mainly because smelters went slow in importing grades for which there was adequate domestic availability, which eased the reliance on imports but underscored the point that demand overall had increased. In fact, domestic manganese ore production rose 8% to 1.61 mnt over 5MCY’24 y-o-y (1.49 mnt) to feed the growing off-take.

Reasons behind manganese ore import riseIncreased manganese alloys production – There has been a sharp increase in manganese alloys production in the two production hubs for the same in India – Vizag and Raipur – on the back of new capacities going onstream. This, in turn, fuelled the demand for both imported and domestic manganese ores.

During the first five months of 2024 smelters in the Vizag area increased total capacity by 60-70 megavolt-ampere (mva). The expansion spanned furnaces of varying capacities, ranging from 9-33 mva. These cumulatively have a capacity to produce an additional 10,000-15,000t per month. Key Raipur smelters too have set up fresh 40-50 mva capacities. This expansion has necessitated increased volumes of imported ore to meet production requirements.
Rising crude steel output fuels demand: India has so far been the sweetest spot on the global steel terrain. Through the first five months of calendar 2024, crude steel production rose 11% y-o-y to around 62 mnt. This growth was primarily driven by a 2% y-o-y increase in production via the blast furnace-basic oxygen furnace (BF-BOF) route, a key consumer of manganese alloys.
Restocking demand from smelters: Smelters had restocked well in advance, based on a few reasons. First, they had anticipated a sharp increase in crude steel production ahead of India’s general elections. Manganese ore takes at least two-and-half months to arrive at Indian ports from the point of booking done at a South African port. The material that arrived in March had actually been booked in January. Secondly, at the time of booking, ending of the last year, manganese ore prices had been at historically low levels and this prompted buyers to book larger volumes to reap the price benefit. Thirdly, in March, South32 had announced the closure of operations at its GEMCO mines. This event likely caused concerns about potential price increases, leading producers to book significant volumes in advance.

Import parity drives port-based purchases: Favourable import parity conditions incentivised port-based ore buyers too. Landed prices of Mn37% ore from South Africa were at $142-147/t CNF. In rupee parity, this compared more or less favourably with the ex-works (exw) prices of domestic miner MOIL’s INR 12,221-12,832/t ($147-$154/t) in January- February 2024, for the same grade.
Buyers opted for bulk purchases, taking advantage of the lower imported prices since domestic prices over these five months were actually higher.

Outlook
India’s manganese ore imports may become sluggish in the third quarter (Q3CY’24) amidst slowdown in steel demand and resistance from smelters to procure at the higher end of the price spectrum.
Domestic manganese alloys consumption also raises concerns, with a key Durgapur importer predicting stable prices until a global surge in bulk manganese alloy demand materialises. This aligns with reports of lower bulk bookings in recent months after a surge in imported ore by Indian smelters.

BigMint is ‘knowledge and marketing partner’ at IFAC 2024

BigMint is teaming up with The Indian Ferro Alloy Producers’ Association (IFAPA) as the Knowledge and Marketing Partner for the 4th International Ferro Alloys Conference, 2024 (IFAC 2024). The conference is a pivotal annual gathering of professionals, experts and stakeholders. This year will be no less an august event, with a central focus on green energy and decarbonisation as a commitment for advancing towards a more sustainable future for the ferro alloys industry worldwide. IFAC 2024 will focus on production, market trends, technological advancements, challenges and enablers. Register fast to catch the early-bird offers. Let us meet over 17th-19th September, at the Taj Palace, New Delhi.

• Imported manganese ore prices surge 35% m-o-m in May
• Indian domestic silico manganese prices rise

MOIL, India’s state-owned mining company, has announced a price hike for manganese ore effective from June 2024. Mn grades above 44% have witnessed a 35% growth in offers m-o-m, while lumps below 44% have increased by 30%, BigMint learned. Notably, the miner had raised offers by up to 40% last month for May’24 deliveries.

Factors that boosted prices were:

Imported manganese ore prices jump 35% m-o-m in May: South African origin Mn ore 37% prices witnessed a 37% m-o-m rise to monthly average of $6.09/dmtu in May 2024, compared to $4.45/dmtu in April 2024. For Australian (46%) and Gabonese (44%) origin manganese ore prices witnessed a sharp rise by 34% to $7.33/t in May 2024 as against $5.48/dmtu in April 2024 and $6.86/dmtu in May 2024 which was $5.13/dmtu in April 2024.

Global miners raise offers – Eramet Comilog, a leading manganese ore exporter based in Gabon, has announced its July shipments for Gabonese lump ore with 44.5% manganese witnessing a significant hike by $1.40/dmtu to $8.30/dmtu CIF China. Limited mine supply, along with China’s reduction of stockpiles, have bolstered manganese ore prices.

Moreover, cyclone Meghan has disrupted operations at South32’s GEMCO unit in June, dock operations and exports are set to recommence in the third quarter of financial year 2025 (Q3FY’25) and a major derailment suffered by Gabon has also impacted prices of imported manganese ore to shoot up.

Indian domestic silico manganese prices rise: The Indian silico manganese market surged by INR 18,200/t ($218/t) in May 2024, with the grade 60-14 rising by 25% m-o-m that settled at INR 90,000 /t ($1,079/t) when compared to INR 72,000/t ($863/t) exw Raipur in April 2024. The domestic silico manganese market saw a significant price surge this month. Panic buying, spurred by rising manganese ore prices in both domestic and global markets, have driven offers higher, reflecting heightened market uncertainty and demand pressures.

India’s silico manganese export prices rise: Silico manganese (60-14) export prices witnessed a 28% m-o-m rise by $240/t to $1,100/t FOB India in May 2024, compared to $860/t in April 2024.While, silico manganese (65-16) increased by 25% ($240/t) to $1,200/t FOB India in May 2024, as against $960/t in April 2024. The upsurge was driven by rising costs of imported ore, a key raw material for silico manganese production, and limited exportable tonnage availability, adding upward pressure on prices. With most producers heavily booked for shipments through mid-June 2024, the market experienced significant upward momentum, reflecting the combined impact of supply constraints and robust demand on price dynamics.

Indian billet prices increase by 4% m-o-m: The domestic billet price rise contributed to higher offers, standing at INR 44,500/t ($533/t) in May 2024, up from INR 42,800/t ($513/t) in April 2024 exw-Raipur, an increase of INR 1,700/t ($20/t). This escalation stemmed from elevated prices of sponge iron, pig iron, and silico manganese. Market trade activity settled at approximately 50,000 t in April 2024, reflecting these price dynamics and increased production costs.

• Around 10% of 50 mnt of seaborne trade impacted
• Global miners increase export offers for June shipments
• Chinese demand surges but domestic supply remains tight
• Weak import demand for Indian Mn alloys may cap prices

Morning Brief: In a significant development, imported manganese ore prices hit over a 4-year high in May, 2024. The disruption mirrored a similar event in May 2020 and has significantly impacted the manganese ore market. Prices of manganese ore lumps (Mn 37%), CNF east coast, India, (South African-origin) were recorded at $6.4/dmtu last week, the highest since May 2020.

Global miners like South32 Ltd and Eramet Comilog hiked their offers. South32, the world’s leading miner, has increased offers for its 37% grade South African manganese ore lumps by $2.2/dmtu to $6.50/dmtu CIF China for June shipments. Additionally, its 37% grade South African semi-carbonate lumps rose by $5.1/dmtu CIF China.

Eramet Comilog, a leading manganese ore exporter based in Gabon, has announced its June shipment prices of manganese ore destined for China. The price of Gabonese lump ore with 44.5% manganese content increased significantly by $2/dmtu, to $6.90/dmtu CIF China. Limited mine supply, along with China’s reduction of stockpiles, have bolstered manganese ore prices. Moreover, India’s largest manganese ore miner, MOIL, raised offers. Prices of grades above 44% have witnessed a 40% growth m-o-m, while lumps below 44% have increased by 25% in May 2024.
Supply disruptions have impacted about 10% (5 mnt) of the total seaborne trade of around 50 mnt, BigMint understands.

Reasons behind price hike
Cyclone disrupts operations at South32: Following tropical cyclone Megan’s structural damage to its terminal and other infrastructure at the mine, Groote Eylandt Mining Company (GEMCO) decided to cease production at its 6 million tonnes/year (mnt/y) mine. It may be noted here that 60% of GEMCO is owned by South32, with Anglo American holding the remaining 40% share. The miner withdrew its 3.4 mnt guidance for its portion of GEMCO’s production in the financial year ending 30 June, shortly after the hurricane made landfall. South32’s GEMCO output for the previous fiscal year was at 3.55 mnt.

Derailment issue in Gabon: Gabon, the world’s second largest manganese ore mining country, experienced a derailment accident on 26 April, with nearly 300 metres of track damaged and 26 empty cars impacted. The repair time may take about two weeks to a month. With a monthly manganese ore transportation volume of over 5,00,000 tonnes (t) per month in Gabon and a long-term supply stoppage of South32 manganese ore, and if the repair time at Gabon’s transportation railway is too long, there may be further tension in manganese ore supplies. Complexities surrounding this issue also drove imported manganese ore prices higher.

Return of Chinese mills post-holidays: The enthusiasm of Chinese enterprises for procurement has also increased manganese ore prices as they returned to the market after a series of holidays, starting with the Lunar Year in February and ending with Labour Day in May. However, the enthusiasm of manufacturers to replenish inventory has decreased. The increased demand has decreased the number of inventory days by more than 30% compared to the beginning of the year. In the past month, inventory in Ningxia and the southern production hub have slightly rebounded from absolute lows. The main reason behind the decreased inventory was the rise in demand amid tight supply of raw material (manganese ore) which had rendered major manganese ore producers temporarily out of operation. China is the largest buyer of manganese ore from Australia but supply was scant from here too as miners had rationalised production because of weather issues. And delayed shipments of high-grade manganese ore also created a panic situation forcing these Chinese smelters to increase import volumes from Gabon, and South Africa.

Outlook
South32 anticipates restarting export sales and wharf operations in Q3FY’25 (January-March 2025) based on their initial estimates. However, sources acknowledged challenges. “We are exploring alternative shipping options to mitigate the impact of the wharf outage. These options may create a limited export capacity for ore in the near future. This may drive prices higher,” said a company spokesperson.

Samancor’s joint venture, on the other hand, is planning to resume mining at South32’s GEMCO unit in June post-suspending in March, aiming to build stockpiles before the 2024-2025 wet season. Recovery measures from March’s cyclone impact include de-watering and infrastructure repairs. Wharf operations and exports are set to recommence in Q3FY’25.

Global miners expect prices to remain on the higher side for about a month. However, the outlook is mixed for the next couple of months. Factors that may weigh down prices include weak demand for Indian manganese alloys from traditional markets like the European Union (EU), Japan etc. This may lower exports and divert volumes in the domestic market which may cap the price hike.

In addition, Indian steel demand may pick up in H2 which may boost manganese alloys demand, but in the short term no significant increase is expected. The manganese ore cargoes booked by Indian smelters in March-April at lower price levels will be arriving in June.

• Panic selling, lower offers weigh on prices
• Need-based procurement in domestic market

The domestic silico manganese market witnessed a counterintuitive price correction this week, exhibiting a significant downward trend that defies recent market expectations. Key producing regions in India experienced a notable price decrease on a w-o-w basis compared to the assessment ending 14 May, 2024. Prices are seen edging close to one month low, as per data maintained with BigMint.

BigMint’s assessments on 21 May revealed a substantial w-o-w decrease of INR 6,300-7,900/t ($76-$95/t) for grade 60-14 silico manganese. Prices of this grade were assessed yesterday at INR 84,000-87,200/t ($1,008-$1,048/t) exw. Notably, offers in Raipur were at INR 87,000-88,000/t ($1,045-$1,057/t) exw.

Market overview

1. Need based procurement in the domestic market: India’s steel mills procured silico manganese according to their needs. This cautious approach reflects buyers’ anticipation of further price cuts, resulting in lower purchase volumes in the immediate run. The reluctance to acquire at current rates puts additional strain on silico manganese smelters, which are already struggling in a shrinking market. In addition, lower offers from traders and panic sales on expectation of further price drop has resulted in price drop.

2. Cost-competitive offers from other regions: Manufacturers from Raigarh are offering material in the range of INR 83,000 to 84,500/t ($775), putting pressure on the Raipur domestic price. Few other merchants provided lower rates, making the players cautious to accept higher offers. However, major smelters are accepting offers ranging from INR 86,500-88,000/t ($1038-$1,055/t).

“One of the key producers from Vizag notified BigMint that we are unable to trade at INR 86,000/t exw in Vizag since competitive prices from Raigarh and Durgapur are significantly lower than the Vizag smelters’ offerings. Vizag is under pressure to lower prices due to drop in manganese alloys export prices and price drop.”

3. Fall on silico manganese export prices : The Indian silico manganese export market encounters significant headwinds due to subdued demand. Export prices have fallen by $30 per tonne compared to the previous week, reflecting a buyer’s market. Weak demand from the alloy steel sector, a key consumer of silico manganese, is pressuring prices and requiring price cuts to clear existing stockpiles. Low overall trading activity in the global market further weakens export prospects by limiting buying activity. Furthermore, port inquiries in India suggest potential for further price decreases, with inquiries at $1,090-1,110/t FOB (Vizag/Haldia). Recent deals concluded at these lower levels raise buyer expectations of a sustained downward price trend.

4. Imported manganese ore supply shortage seen easing: Prices of imported manganese ore, a crucial element in silico manganese production, remained unchanged. This stability contradicts the anticipated upward pressure on silico manganese prices due to rising raw material costs. Notably, Samancor’s joint venture plans to resume mining at South32’s GEMCO unit in June post suspending in March, aiming to build stockpiles before the 2024/2025 wet season. Recovery from March’s cyclone impacts includes dewatering and infrastructure repairs.

Outlook

India’s domestic silico manganese market faces potential price fluctuations. Weak export demand and competition from other regions could push prices down, while global miners expect higher prices to persist. Closely monitoring these conflicting factors is crucial for market participants to make informed decisions on pricing and production in this uncertain short-term environment.

Additionally, India’s domestic silico manganese market shows mixed price signals. While downward pressure exists, some smelters secured deals at INR 90,000/t exw Vizag, highlighting potential pockets of stability. Close monitoring of market activity remains crucial.

BigMint suggests monitoring the upcoming imported Mn ore weekly index, situation in Europe, the ongoing buying activity from Southeast Asia, and the performance of the domestic steel trade would be critical in predicting the future trajectory of silico manganese prices in India.