India: Silico Manganese Prices Falling Sharply on Thin Trading

Indian Silico Manganese prices are falling continuously in line with thin trading activities amid a lackluster steel market. Prices have been going down aggressively in the past few weeks. Producers are facing selling pressure as the buyers are quite aggressive at negotiating. Demand is weak in both domestic as well as the global market. Producers believe that the prices are aggressively coming down due to low demand, and there is a very little chance that the prices may redeem soon.

In Durgapur, Silico Manganese 60-14 is being offered at INR 62,750/MT Ex-Durgapur. In Raipur, the prices are at INR 62,000/MT Ex- Raipur. In the Export market, the demand remains moderate; producers are offering 60-14 grade at USD 895/MT and 65-16 is being offered at USD 1000-1005/MT.

Silico Manganese producers are likely to reduce prices further as MOIL has cut down the prices of Manganese Ore by 5%. Moreover, with the continuous increasing freight rates, producers remain pessimistic for the export realizations as well. An Indian producer said that the production of Silico Manganese is mostly dependent on imports of Ore and an increase in freight rates could have an impact over the market. Trade wars, policy shifts, and geopolitical uncertainty are all weighing on financial markets and global outlook. Moreover, the concern over climate change and global greenhouse gas emissions are influencing such policies worldwide.

The maritime industry is preparing for one of the most significant changes in its recent history �" a mandatory decrease in sulfur oxide emissions that will be imposed in just over three months’ time i.e.Jan'20. There is a new very stringent rule that will be put in place of January 2020, which is called IMO 2020. According to IMO2020, The International Maritime Organization (IMO) has ruled that from 1 January 2020, marine sector emissions in international waters be slashed. The marine sector will have to reduce Sulphur emissions by over 80% by switching to lower sulphur fuels. In order to comply, the shipping industries have to opt for either of the two options:
1. Use cleaner diesel in place of bunker oils which is currently used right now. Cleaner diesel costs more than bunker oils.
2. Alternatively, shippers could spend large capitals over retro-fitting ships to “scrub” emissions.

However, both options add to costs. Thousands of ships are being taken out of the market to fit equipment called scrubbers that will allow them to keep burning today’s cheaper fuel. The ships that don’t have them are expected to have to pay more. Such policy will influence the freight rates, and therefore the producers remain wary and pessimistic about how the market operates.