[Ferro-Alloys.com]

 

Due to the recent economic slowdown in the European economy, market demand has been affected and markets all over the world have been depressed. This is true, especially in China, the reason behind lower demand for steel. Although the Indian economy has a strong base, our growth has also been affected due to the global slowdown.

 

Prices of all ferro-alloys have maintained downward trend since a couple of months against previous gains reflecting continuous soft demand from steelmakers, rebuilding of depleted inventories and the supply-side concerns following both planned and unplanned outages. Prices are going soft on daily basis for Silico Manganese and Ferro Manganese. But Ferro Chrome and Ferro Silicon prices are increasing due to a rise in input cost of production. Prices are at the bottom levels for Ferro Alloy, below the costing price. Manganese Alloys producers are under tremendous pressure reflecting the magnitude of supply concerns in the context of demand recovery from steelmakers against higher input cost due to the recent increase of power tariff in various states. 

 

The current market scenario is expected to remain soft for some time, reflecting lower demand, however, there is light at the end of 

the tunnel. The estimated production capacity of all bulk Ferro Alloys in the country during the last fiscal was about 5.15 million tons including Manganese Alloys, Chrome Alloys, Ferro Silicon and Noble Alloys. The estimated production capacity of Manganese Alloys is around 3.50 mtpa and Chrome Alloys production capacity is 2.0 mtpa while that for Ferro Silicon is 0.25 mtpa against domestic demand of 3.50 mt. Hence the rest of the produced quantity is being exported making the industry dependent more on the export market. 

 

On analyzing the domestic demand and capacity it is seen that the domestic demand increases about 17 to 18 percent every year while capacities increase by about 30-32 percent every year despite higher power tariff and shortage of raw materials including Manganese ore and Chrome ore.

 

Ferro alloys industry is a very power-intensive sector, and the power cost is about 35-40 percent of its total production cost. The balance is attributable to the cost of ore and other ingredients required. The power tariff in India is 3-4 times higher in comparison with the competing countries.

 

Let’s look at the power costs in different states.

 

In Andhra Pradesh, Discom power tariff is `7.52 per unit. There is news that Andhra Govt. have subsidies the Power tariff by Rs 1.30 Paisa per unit. 

 

In West Bengal, DVC’s tariff is about `6.00 per unit.

 

In Chhattisgarh, tariff is about `6.20 per unit after rebate of 1 rupee while tariff and at Jindal park at Raigarh is Rs. 5.98 paisa per unit.

 

In Madhya Pradesh, tariff is around `6.00 per unit. The average national power tariff is above `7.50.

 

Hence, globally, Ferro alloys plants are situated geographically where the power tariffs are at moderate rates. The major raw materials required to produce Ferro Alloys are Manganese ore for Manganese Alloys and Chrome Ore for Ferro chrome, along with coke, quartz and fluxes, etc. 

 

As for Manganese Ore, India has limited resources. Due to huge demand, there is scarcity EXPERT SPEAK of good quality ore and the entire domestic requirements of raw materials can’t be fully met by the domestic market. Hence the industry is depending on imports. 

 

MOIL Ltd, is currently accounting for 25 percent production of India’s total production and the company has produced about 1.71 million tons of ore during last fiscal year while the balance quantity has been produced by private mine owners. Total production is around 2.40 million tons against domestic demand of about 5.8 mtpa. There is a huge gap between demand and supply.