Better Days Ahead For Silico Manganese Producers

At the ferro alloys conference held in Beijing during the first week of June 1998 the Metal Bulletin Research spokesman forecast a bright future for silico manganese producer exporters during the next four to five years.

Silico manganese prices will start moving up during 1999 and continue to rise until 2002 when they may reach $650 per tonne due to increased demand by arc furnace steel producers and alloy steel producers. This would help most of the exporting countries.

India has emerged as a regular exporter of silico manganese most of it coming from Ispat Alloys. But from last year Navbharat Ferro Alloys has also joined the group with Sandur Manganese contributing something if it gets NTPC power.

 

Production of silico manganese in India was around 192,000 tonnes in 1997-98 almost the same as in 1996-97.

The capacity for silico manganese is around 450,000 tonnes and the capacity utilisation is less than 50 per cent. And therefore, there is huge reserve capacity if exports become profitable.

One of the largest producer of silico manganese Universal Ferro and Allied Chemicals is now closed for 18 months and the revival has been delayed due to various reasons. Today the biggest producer of silico manganese is Ispat Alloys which produced nearly 55,000 tonnes in 1997-98 more than 50 per cent of which was exported.

The second largest producer was Maharashtra Elektrosmelt, at around 32,000 tonnes, all of which went to SAIL. The domestic demand for silico manganese is estimated at around 150,000 tonnes which is almost the same as ferro manganese.

Exports for the last few years have been averaging around 40,000 tonnes. Imports have started coming and in 1997-98 they are estimated at around 4000 tonnes. Imports may increase as the main steel plants particularly on the coast like Ispat, Essar and Vizag steel may prefer imports as they offer better credit, quality and often lower price.

Exports of silico manganese at the present high power rates are possible only because exports are from captive power or NTPC power. Ispat is also self sufficient in captive power and because of exports gets oil at international price which keeps the power cost low. It can also import coke and other raw material duty free. Navbharat, with the commissioning of captive power plant of 30 mw as also availability of NTPC power and power from Andhra Gas Corporation is able to reduce the power cost and undertake exports and also earn profit in its ferro alloys business.

Silico manganese producers have also sprung up in West Bengal due to lower power costs. There are at least six producers of silico manganese in West Bengal and more are being planned, the power rate in West Bengal has now been increased to around 240 paise per kwh and soon enough may render production difficult. However, apart from power at lower price West Bengal also has plenty of coke from Durgapur and nearby Bokaro Steel plant at a reasonable price.

The main disadvantage of West Bengal producers is the long haul for the ore that they require but since they use the cheapest possible ore there is some relief. The units also can market their finished product to the main steel plants at Durgapur and Bokaro and save on freight. However, so far no producer from West Bengal has emerged as an exporter but if prices in the world maket improve they should be able to step in.

At present, world prices of silico manganese are around $430 to $450 per tonne and if the turnaround comes soon enough prices may shoot up to $500 per tonne at which most of the Indian producers will be viable.