Steady demand, tight supply to support SiMn in India

India's silico-manganese prices are expected to remain stable or move slightly higher on growing tightness in supply and steady export demand.

Ferro-alloy producers in India have curbed their output because of insufficient oxygen supply for operating plants after the Indian government temporarily banned the use of industrial oxygen and diverted supplies for medical use. This production curtailment has further tightened supplies of manganese alloy in the domestic market.

Despite reduced availability, rising rates of Covid-19 infections in the country and lower economic activity during lockdowns has weakened demand from steel-consuming sectors and weighed on demand for alloys used in the steel sector.

Prices for Indian 60pc silico-manganese alloy dropped to 86,000-88,000 rupees/t ex-works on 11 May, from Rs89,000-92,000/t ex-works in April, on subdued domestic demand. In the near term, steel mills in India have resumed restocking but intakes remain low because of uncertainty over operations in coming months, market participants said.

Meanwhile, a steady rise in demand for Indian 65pc-grade alloy for exports has prompted port-based producers to raise their output of the higher-grade alloy, fuelling concerns over access to supply of 60pc-grade alloy in the domestic market.

Most ferro-alloy producers are fully booked until June and have little material to offer in the spot market, sources said. Indian producers have also warned that restricted movement in port areas and a lack of workers has slowed loading and unloading activities, which could delay shipments to international consumers.

Tight global supplies and the expectation of supply disruptions from India prompted overseas suppliers to book material, with many currently negotiating contracts for mid-July and August shipments, market participants said.

Demand from Japan, the Middle East, Turkey and Europe has led to an increase in 65pc-grade offers, with prices settling this week at $1,300-1,320/t fob India east coast, up from $1,280-1,300/t fob India east cost in early May.

By Samil Surendran