26/05/25
Demand for India Mn alloy export falters, surplus rises
Demand for India Mn alloy export falters, surplus rises
Mumbai, 25 May (Argus) — India's manganese alloys sector is under significant
pressure from falling export demand, mounting domestic overcapacity and
narrowing margins, chairman of the Indian Ferro Alloy Producers' Association
(IFAPA) Manish Sarda told Argus . Prices are unlikely to rebound until
geopolitical tensions in the Middle East subside, he added. Prices of
silico-manganese and ferro-manganese have fallen sharply and may decline
further, until geopolitical tensions in the Middle East subside. And producers
that are facing capital constraints may sell below production costs to maintain
operations, Sarda said last week. Argus assessed 60pc silico-manganese at
$795-810/t fob India on 21 May compared with $910-930/t fob levels in mid-April.
Similarly, 65pc silico-manganese prices fell to $880-910/t fob levels on 21 May
from $1,000-1,020/t fob on mid-April. India's domestic 60-pc silico-manganese
prices dropped by 14,000 rupee/t ($146.92/t) from mid-April to Rs75,000-76,000/t
ex-works on 21 May. Assessments for 70pc and 75pc ferro-manganese were at
Rs78,000-79,000/t and Rs84,500-85,500/t, respectively, on 21 May, down by
Rs7,000/t and Rs11,000/t from April. "I wouldn't be surprised if prices drop
another Rs1,000/t beyond this," Sarda said, noting that liquidity constraints
are forcing producers to prioritise cash flow over profitability. But producers
with captive power retain a cost advantage and some margin buffer. Prices
briefly increased in early April, when war-related stockpiling supported prices.
But prices reversed quickly. Higher freight costs, tighter vessel availability,
weaker export demand and a rise in domestic capacity forced some producers to
cut prices aggressively to retain export volumes, despite a depreciation of the
rupee, which would typically support exports otherwise. Silico-manganese hit
harder Weak export demand puts greater pressure on the Indian silico-manganese
sector given that silico-manganese is widely produced in India and that India is
the largest seaborne trader. Only a small number of Indian companies produce
ferro-manganese for the specialised steel market. Higher freight and fuel costs
have further reduced export competitiveness. The Middle East, previously a key
export market, has experienced plant closures and a collapse in demand because
of capital shortages and conflict, causing a sharper price fall of
silico-manganese. Some Indian plants have reduced or stopped operations because
of financial stress. Price recovery depends on stability and reconstruction in
the Middle East. "Until we see a complete stoppage of war and reconstruction
happening in the Middle East we cannot see exports coming up for Indian
producers," Sarda said. Overcapacity driving the downturn India has installed
ferro-alloy capacity of about 5.5mn t/yr, while domestic demand is no more than
1.5mn t/yr. The country exports around 1.4mn t/yr, making it the world's largest
exporter of silico-manganese and one of the largest exporters of
ferro-manganese. EU safeguard quotas are already limiting Indian shipments to
Europe, and the Carbon Border Adjustment Mechanism (CBAM) will add further
costs. Indian producers will eventually need to adapt and reduce their carbon
cost exposure, but the near-term effect on competitiveness is negative. "Any
cost that comes onto the producer on the basis of CBAM is not going to make the
product competitive," Sarda said. Sarda is optimistic that the entry of
state-run mining firm OMC to the manganese ore market could help reduce Indian
alloys sector's dependence on imported ore. OMC will need time to scale up but
could offer logistical advantages for producers based in India's eastern and
southern regions sourcing ore from the state of Odisha. State-owned mining firm
MOIL is the largest manganese ore producer in India, with output of about 1.5mn
t/yr. India is the second-largest buyer of manganese ore behind China, importing
nearly 7mn t/yr. Access to globally competitive power tariffs remains essential
for the ferro-alloy industry, as electricity is the largest cost component. The
removal of import duties on manganese ore is also a key requirement, since these
duties add unnecessary costs given India's reliance on imports. Policy
discussions on both issues are ongoing, but progress has been slow, Sarda said.
Looking forward, Sarda expects a cautiously stable third quarter, with downside
risks and continued export pressure resulting from uncertainties in the Middle
East. Sarda is also the managing director of Sarda Metals and Energy. Sarda
Metals and Energy currently operates three furnaces at its Vizag plant — two 36
mega volt ampere (MVA) furnace and one 40 MVA furnace. It has received approvals
for adding three more furnaces. By Deepika Singh Send comments and request more
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