26/03/05
Gulf shipping crisis disrupts India’s Mn alloy exports
Mumbai, 5 March (Argus) — The mounting war in the Middle East has disrupted
trade flows for India's manganese alloy sector, creating one of the most
challenging operating environments in recent years with shipping suspensions,
rising freight and mounting cost pressures. India typically supplies
500,000-600,000t of manganese alloys annually to the UAE, Turkey, Egypt, Qatar,
Oman, Bahrain and Saudi Arabia. Most carriers have halted services to Europe,
north Africa and the Middle East because of security threats and soaring
insurance premiums, stopping shipments from Indian exporters. Monthly flows of
around 40,000–50,000t have now effectively stopped, and shipments have been
completely stalled for nearly 15 days. Freight is the single largest disruption.
The diversion of vessels around the Cape of Good Hope to avoid the Suez Canal
for shipments to Europe has further strained logistics because of security and
insurance complications. Ships that once completed two voyages in 60-70 days can
now complete only one, tightening vessel availability and extending delivery
timelines for bulk commodities. The strait of Hormuz, long considered more
influential than many stock exchanges in shaping global commodity sentiment, is
again acting as a major volatility trigger, lifting fuel-related and
freight-linked costs, an exporter told Argus . Imported manganese ore costs are
also rising, with freight from some origins climbing from $50-60 to $100-125 per
container, while other routes are now near $1,000 per container. At the producer
level, margin pressure is intensifying. Rising energy costs are eating into
profitability while freight volatility directly undermines export
competitiveness. The weakening rupee offers some relief to exporters through
higher realisations, but the simultaneous rise in import costs for manganese ore
and energy inputs offsets this benefit. The sudden freeze could leave excess
material trapped in the domestic market, adding downward pressure on prices even
as producers face cost inflation. Buyers are delaying contracts because of
uncertainty about price direction amid the volatility, leaving much of the
market in a wait-and-see mode. The sector faces a prolonged stretch of
logistical strain, with exporters recalculating margins and delivery risks and
carriers avoiding key shipping corridors. There are expectations that freight
costs may rise further. Container rates that previously ranged $1,000-1,600
could rise as high as $4,000 a box if the conflict continues, some market
participants said. Freight rates could rise by 30-50pc if the war continues,
traders said. The loss of Middle Eastern demand and the likely buildup of
domestic supply could exert downward pressure, making any immediate price
increase in manganese alloys unlikely, traders said. The broader outlook remains
fluid, with volatility set to persist, while efficiency, captive power and
strategic risk management become more critical in the long term. By Deepika
Singh Send comments and request more information at feedback@argusmedia.com
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