The impact of the new Foreign Trade Policy (FTP), which reduces export incentive on Ferro Alloys, is being weighed by the market. Indian Silico manganese prices remain stable as the market awaits implications of the new policy to manifest themselves.
New FTP reduces Export Incentives given to Indian Ferro Alloy Industry
The competitiveness of Indian Ferro alloys in international markets may be eroded by the recent reduction in export benefits to the sector under the Merchandise Exports from India Scheme (MEIS), announced under FTP 2015-2020.
The reduction is based on category of the country
Earlier, Indian Ferro alloy exporters used to get an incentive of 4% under Focus Product Scheme and a duty draw back of 1.4%. Effective from 1 Apr’15 under MEIS, the incentive has now been reduced to 2% while the duty draw back remains the same at 1.4%. The reduction is based on category of the country. Exports to countries falling under category ‘A’ will not be eligible for any incentive, for category ‘B’ it will be 2% and for category ‘C’ it will be ‘nil’. This means that the new MEIS has effectively reduced incentive on Ferro alloys by 2% when exported to emerging markets like Japan, Korea, ASEAN countries and reduced by 4% when exported to traditional markets like European Union, US and Canada.
Volume of deals in the export markets has been low. Although, some producers have raised their export offers after the new FTP announcement. Export offers for grade 60-14 is at USD 720-730/MT FoB East coast India and 65-16 is being offered at around USD 800-820/MT FoB East coast India.
A comprehensive mapping of Ferro alloys shows that FeMn topped the export charts for 2014, with 930,724 MT exported; 44% exported to Iran. FeSi followed with 157,000 MT exports; highest 18% exported to France. SiMn lagged behind with only 36,900 MT being exported; highest 21% exported to Japan.
MOIL reduces Silico Grade Prices
The prices of all Silico grade prices have been reduced by 20-25%
Manganese Ore India (MOIL), the country’s largest and government owned producer, has cut prices of various grades of Manganese ore by 10-25% for the quarter April-June, 2015. Prices are cut against the backdrop of falling Manganese alloys prices in Indian and global market. The prices of all Silico grade prices have been reduced by 20-25%. Indian manufacturers are of the opinion that MOIL prices will have little impact on current Ferro alloy prices, as they are already trading at a discounted price.
Prices remain stable in the domestic Market
The Silico manganese market activity in India remains low as major Steel mills are yet to begin purchase plans in the new fiscal. However, producers from Raipur have raised their offers marginally with the reduction of CST rate (from 2% to 1%), as buyers outside Chhattisgarh will have to pay lesser by 1%. Grade 60-14 is currently being offered at around INR 45,500-46,000/MT (ex-Raipur) and INR 47,500/MT (ex-Durgapur). According to sources, Prakash Industries is currently offering Silico manganese at INR 43,500/MT (Ex-Champa).
The mood is better in the market and we have concluded deals at levels higher than last week. Demand is edging up bit by bit. – A producer based in Raipur.
What worries the Indian Silico Manganese market?
Several factors like export incentive removal, weak demand from domestic and export market, and anti-dumping investigation on Indian Silico manganese continues to pressurize the market. SteelMint assessed that if demand for Indian Silico manganese does not pick up from overseas markets, it would put pressure on the producers to offer aggressively in the domestic market, and prices could tumble again