Manganese alloy prices improve

By Gilbert Lobo

June 15, 2009: Manganese alloy producers are seeing better days as price of ferro manganese is now over Rs 42,000 to Rs 43,000 per ton, and silico manganese has also edged up to Rs 37,000 to 38,000 per ton ex works free of taxes.

Demand has improved, but there is a scarcity of manganese ore in the domestic market. Also there is shortage of power as many of the ferro alloy producers who have captive power prefer selling it to grid rather than produce ferro alloys, where the returns are poor. Hence availability of ferro alloys gets limited and prices rise.

But international prices of manganese ore are falling and it is said that the price of high grade manganese ore with 48 percent Mn has already fallen to $3.50 per Mn unit and may fall further. If this happens it will be good for the manganese alloy producers.

According to the Indian Ferro Alloy Producers' Association (IFAPA), manganese alloy producers are depending a lot more on imported ore and also on exports of manganese alloys. This is particularly so in the eastern region of the country, namely West Bengal and Orissa.

The total manganese alloys capacity in India is around 2.10 million tons (mt), with a total capacity of 1182 MVA with 161 furnaces in 76 units. Of this, the eastern region has 467.55 MVA with 66 furnaces in 29 units. The central region consists of Jharkhand, Bihar, Chhattisgarh and Madhya Pradesh, which has 330.50 MVA capacity with 58 furnaces in 30 units.

The highest ever production of manganese alloys was achieved in 2007-08 with ferro manganese production at 3,78,000 tons, medium carbon ferro manganese at 7,500 tons and silico manganese at 8,58,600 tons. The final figures for 2008-09 are still not available, but they are down by about 20 percent.

Export of manganese alloys in 2007-08 was also the highest ever, with ferro manganese exports at 1,10,3000 tons and silico manganese at 2,62,8000 tons. In 2008-09, exports were down by around 30 percent but final figures were not available.

The IFAPA is urging the government to increase the customs duty on ferro alloys to 10 percent from the present 5 percent in order to protect the domestic industry. Import of ferro manganese was 21,751 tons in 2007-08 against 12,037 tons in 2006-07 and 16,102 tons in 2005-06. Imports of silico manganese were, however, negligible.

IFAPA also wants the government to reduce the customs duty on manganese ore from 2 percent to nil. The industry has to come to depend on imported ore in a big way. Imports of manganese ore during April to September 2008 were at 7,38,961 tons against imports of 6,86,052 tons during the whole of 2007-08 and 2,84,202 tons in 2006-07 and only 13,280 tons in 2005-06.

The present production of manganese ore is said to be around 2 mt, which is not enough to meet the needs of the industry and hence large scale imports of the ore are taking place during the last about three years.

Manganese ore may fall short of the needs during the coming years. Manganese Ore India (MOIL) has tied up with Vizag Steel to produce around 100,0000 tons of manganese alloys in the next about three years.

MOIL also has a joint venture with SAIL to produce anther 1,50,000 tons of manganese alloys for Bhilai Steel Plant. Besides, Mahrashthra Elektrosmelt, which is a subsidiary of SAIL, is also expanding its manganese alloy capacity by another 50,000 tons per annum over and above the present 1,20,000 tons.

The Tatas also want to produce manganese alloys from their ores and hence the supply of ore will be limited in future. Hence imports of manganese ores are likely to increase during the coming years.

The IFAPA has sought that the import duty changes should be done in the forthcoming July budget that the new government will present. Eom

Source: Steel Insights