Viewpoint: EU curbs darken India’s Mn alloy outlook

India's manganese alloy exporters are heading into a difficult 2026 as new quotas and carbon costs sharply curtail access to their largest overseas market, Europe.

Safeguard limits imposed by the European Union, alongside the full rollout of the bloc's carbon border levy, are set to halve India's potential shipments to Europe, exacerbating domestic oversupply, weighing on prices and squeezing margins — particularly for smaller smelters with few alternative outlets.

Europe has capped India's ferro-alloy imports for 2026 at 126,800t of silico-manganese with price threshold of €1,392/t. While 69,900t of ferro-manganese with threshold of €1,316/t. These quotas cut India's potential shipments to the region by almost half.

Europe typically accounts for about 40pc of India's ferro-alloy exports, leaving producers with few alternatives. India exported 1.67mn t of manganese alloys in the year to October 2025 and 1.83mn t in 2024, customs data show. Of these volumes, 438,091t in 2025 and 461,963t in 2024 went to Europe. The challenge now is what to do with the roughly 300,000-400,000t that may not be able to enter Europe because of the quota cap, exporters said.

Participants believe the excess tonnages could trigger production cuts, lower margins and financial strain, particularly for smaller smelters, as no other market can absorb the excess material. Traders also expect shipment schedules to become more uncertain. Some exporters may delay cargoes if they exceed quarterly quota limits, pushing arrivals into the next period to remain within duty-free limits. This could create instability in early 2026, resulting in irregular supply flows and an unclear market direction, market participants said.

Exports exceeding the annual quota can enter duty-free only if priced above certain minimum thresholds. Many European buyers are unwilling to accept these prices. This limits the chance of selling excess volumes into Europe and is already forcing producers to redirect material to the domestic market or smaller foreign destinations.

Export prices have already declined. Indian 60pc silico-manganese prices have fallen to $780-800/t fob in December end, down from $840-860/t fob before the safeguard announcement. The 65pc alloy price fell to $895-910/t, compared with $930-940/t fob at August starting. Traders expect another 5-10pc drop early next year as more unsold material hits the market.

Smaller smelters remain the most vulnerable in this environment. Many rely heavily on export revenues and may be forced to cut output or suspend operations if oversupply intensifies.

Larger producers may try to push volumes into Asia, the Middle East and Africa, but these regions cannot replace Europe's demand. Competition is increasing and pushing prices down further because more Indian suppliers target these markets.

Another challenge in 2026 will be the European Union's Carbon Border Adjustment Mechanism (CBAM), which becomes fully effective in January. Under the CBAM, European importers must pay charges based on the carbon emissions of the products they buy.

This CBAM now covers alloys such as ferro-manganese and ferro-chrome under its transitional phase, requiring importers to report embedded emissions. From January 2026, these imports will incur CBAM certificate costs, adding roughly 5–10pc to landed prices based on default carbon intensity values.

For say, if ferro-manganese has a default carbon intensity of about 2.07 tCO₂ per tonne, and EU carbon prices are around €80/tCO₂, the extra cost would be roughly €165/t.

This will make Indian manganese alloys more expensive unless producers invest in low-emission technology — an upgrade many small and mid-sized smelters cannot afford.

A few European buyers are already reviewing long-term contracts with Indian suppliers because of the added carbon-related costs.

Market participants expect the first half of 2026 to be slow and uncertain. The industry will need to adapt quickly by exploring new markets, alternative alloy grades and cost-control measures to remain viable, market participants said.

Absent meaningful production cuts or new demand centres, India's manganese alloy market risks entering 2026 with weaker prices, higher inventories and limited export visibility.

By Deepika Singh