fimi paper manganese alloy industry in india gokarn km

MnMn--Cr Ores & Ferroalloys Buyer/Seller InterfaceCr Ores & Ferroalloys Buyer/Seller Interface PuducherryPuducherry, 13, 13--14 May 201014 May 2010

Manganese Manganese Alloy Industry Alloy Industry in India in India -- Opportunities Opportunities and and ChallengesChallenges

Prabhash GokarnPrabhash Gokarn

Tata Steel, KolkataTata Steel, Kolkata


The presentation is an amalgamation of author’s own The presentation is an amalgamation of author’s own views and thoughts.views and thoughts.

Tata Steel does not necessarily subscribe to the views Tata Steel does not necessarily subscribe to the views and thoughts expressed in the presentation and and thoughts expressed in the presentation and should not be held responsible for the same.should not be held responsible for the same.

DisclaimerDisclaimer


Presentation OutlinePresentation Outline

A. Manganese Market FlowA. Manganese Market Flow

B. Demand DriversB. Demand Drivers

C. Manganese Alloy IndustryC. Manganese Alloy Industry

D. Decreasing Global Presence of ChinaD. Decreasing Global Presence of China

E. Opportunity For Indian Manganese Alloy IndustryE. Opportunity For Indian Manganese Alloy Industry

F. Key Success Factors for the Indian Manganese Alloy IndustryF. Key Success Factors for the Indian Manganese Alloy Industry


A. Manganese Market FlowA. Manganese Market Flow


1. Manganese Market Flow1. Manganese Market Flow

HC FeMnHC FeMn

IntegratedIntegrated

MiniMini--millsmills

SiMnSiMn Refined FeMnRefined FeMn

Speciality steelSpeciality steel

OthersOthers

15%15%

85%85%

75%75%

25%25%

30%30%

70%70%

10%10%

Manganese oreManganese ore

990%0%

SlagSlag

15%15%

Feedstock for Feedstock for FerroalloysFerroalloys

IntegratedIntegratedIntegratedIntegrated

MiniMini--millsmills

90%90%

3535%% 99%%

Crude steelCrude steel

5656%%

OthersOthers

FoundryFoundry

WeldingWelding30%30%

70%70%

110%0%

BatteriesBatteries

ChemicalChemical

High Strength Low High Strength Low Alloy steelAlloy steel

Stainless steelStainless steel

85%85%FerroalloysFerroalloys

Carbon Steel Carbon Steel ––Long ProductsLong Products200 S Cr200 S Cr--MnMn

Stainless SteelStainless Steel

Carbon Steel Carbon Steel –– Flat Flat ProductsProducts

Source : Source : RoskillRoskill

6%6%

4%4%


Strong sulphide formerStrong sulphide former

DeoxidantDeoxidant

Weak carbide formerWeak carbide former

Alloying elementAlloying element

SteelmakingSteelmaking

Reduces undesirable amount of sulphur and oxygen in steelReduces undesirable amount of sulphur and oxygen in steel

Improves the response of steel to quenchingImproves the response of steel to quenching

Enhances mechanical properties of steel by increasing hardenability rateEnhances mechanical properties of steel by increasing hardenability rate

NonNon--ferrous alloysferrous alloys

DeoxidantDeoxidant

Alloying elementAlloying element

Enhances corrosion resistance of Al alloysEnhances corrosion resistance of Al alloys

Improves copper alloys castability and strengthImproves copper alloys castability and strength

Can replace part of the Nickel in NiCan replace part of the Nickel in Ni--Al alloysAl alloys

Other usesOther uses

DepolarizerDepolarizer

BactericidalBactericidal

FungicidalFungicidal

Used in dryUsed in dry--cell batteries in the manganese dioxide formcell batteries in the manganese dioxide form

Used in purifying drinking water, treating waste water and odour controlUsed in purifying drinking water, treating waste water and odour control

Used for controlling crop and cereal diseasesUsed for controlling crop and cereal diseases

Carbon

Steel

0.5%

Construction

Steel

1.0%

Stainless Steel

(other series)

1.0%

High Strength

Low Alloy Steel

1.5%

Stainless Steel

(series 200)

12%

Hadfield

Steel

13%

Mn contentMn content

90%90%

10%10%

2. Manganese Uses2. Manganese Uses


FurnaceFurnace

Alloy castingAlloy casting

SlagSlag

Ferroalloys are produced by reducing metal Ferroalloys are produced by reducing metal

oxides with a oxides with a reductantreductant such as coke or coal, such as coke or coal,

ususllyususlly in an Electric Arc Furnace.in an Electric Arc Furnace.

Low ash metallurgical coke is the preferred Low ash metallurgical coke is the preferred

reductantreductant. Electric power is used in the . Electric power is used in the

smelting process and is another important smelting process and is another important

element of cost.element of cost.

Unit consumption per Unit consumption per

tonnetonne of alloyof alloyHC HC FeMnFeMn SiMnSiMn

Energy (Energy (kWhrskWhrs)) 2,6002,600 4,2004,200

OreOre11 ((tonnetonne)) 2.32.3 2.22.2

CokeCoke11 ((tonnetonne)) 0.60.6 0.50.5

11 Manganese ore of 44% Manganese ore of 44% MnMn,,

CrusherCrusher

Ore

Ore

Co

keC

oke

Flu

xFl

ux

3. Manganese Ferro Alloys In Steel Making3. Manganese Ferro Alloys In Steel Making

HC FeMn3.34 kg

Ref FeMn0.93 kg

SiMn5.44 kg

AvgAvg 9.71 kg of Manganese 9.71 kg of Manganese Alloys used per MT SteelAlloys used per MT Steel

FeMnFeMn & Refined & Refined FeMnFeMnused as an alloying used as an alloying additive to Carbon & Cradditive to Carbon & Cr--MnMn Stainless SteelStainless Steel

SiMnSiMn used as a used as a deoxidizer & deoxidizer & alloying additive alloying additive to Carbon Steel to Carbon Steel

High High MnOMnO Slag Slag produced in produced in

making making FeMnFeMnused in making used in making

SiMnSiMn

FeMnFeMn, , SiMnSiMn Production ProcessProduction Process

Source : Source : RoskillRoskill


B. Manganese Demand DriversB. Manganese Demand Drivers


4. Demand Driver 4. Demand Driver –– Steel Production (1)Steel Production (1)

GlobalGlobal ManganeseManganese AlloyAlloy ProductionProduction closelyclosely relatedrelated toto SteelSteel ProductionProductionInIn thethe longlong run,run, MnMn alloyalloy demanddemand shouldshould growgrow higherhigher thanthan SteelSteel demanddemandduedue toto higherhigher growthgrowth ofof ““MnMn intensiveintensive steels”steels” (e(e..gg.. HSLA,HSLA, 200200SS SS,SS, alloyalloy steel)steel)

Global Steel ProductionGlobal Steel ProductionIndex : Peak Scaled to 100Index : Peak Scaled to 100


NAFTA

Rest of Asia

China

-5%

Apparent steel demand 2009 Apparent steel demand 2009 –– 2010 in mill MT, (Y/Y % chg)2010 in mill MT, (Y/Y % chg)

181122 137

2008 2009 e 2010 f

EU - 27

CIS8%-31%

China

Rest of AsiaC & S America

India 12%+8%

10%

+5%+19%

14%

-36%12%

-24%

17%-33%

-24%

Source: WSA, SRO_Oct09

250

145

677

268

70

62

158

Effective crude

steel capacity in

2008


Apparent Steel Demand in 2010 : growth in all regions after slowdownApparent Steel Demand in 2010 : growth in all regions after slowdownHigh Growth in China & India : significant High Growth in China & India : significant MnMn Alloy market opportunityAlloy market opportunity



IndiaIndia

China , at “j” curve around 2000, likely to show tapering growth (2012China , at “j” curve around 2000, likely to show tapering growth (2012--15).15).India has reached the “j” curve, a will grow at double digits (2012India has reached the “j” curve, a will grow at double digits (2012--15).15).India & China will remain high growth markets for India & China will remain high growth markets for MnMn AlloysAlloys


C. Manganese Alloy IndustryC. Manganese Alloy Industry


4. Global Manganese Alloy Industry4. Global Manganese Alloy Industry

World’s largest manganese alloys producersWorld’s largest manganese alloys producers

CompanyCompany CountryCountryCapacity, Capacity,

`000 mt`000 mt

Share in the Share in the

world world

marketmarket

PrivatPrivat GroupGroupUSA, Romania, Poland, Georgia, USA, Romania, Poland, Georgia,

Ukraine, RussiaUkraine, Russia2,5562,556 20%20%

ErametEramet USA, France, Italy, China, NorwayUSA, France, Italy, China, Norway 1,1301,130 9%9%

BHP BillitonBHP Billiton Australia, South AfricaAustralia, South Africa 900900 7%7%

Vale (CVRD)Vale (CVRD) Brazil, Norway, FranceBrazil, Norway, France 620620 5%5%

Nippon Nippon

DenkoDenkoJapan, ChinaJapan, China 483483 4%4%

TinfosTinfos NorwayNorway 420420 3%3%

Source: Metal Expert, CY 2009 Source: Metal Expert, CY 2009

Highly consolidated, with 6 players controlling almost 50% of total productionHighly consolidated, with 6 players controlling almost 50% of total production


5. Indian Manganese Alloy Industry5. Indian Manganese Alloy Industry

Source: Metal ExpertSource: Metal Expert

NBFA, 77NBFA, 77 Shyam, 70Shyam, 70

MEL, 68MEL, 68

Hira, 65Hira, 65

Srinivasa, Srinivasa, 6262

Sharda, Sharda, 6060

Tata, Tata, 2222

Others, Others, 792792

Highly fragmented, top 7 players contribute to just ~30% of total production.Highly fragmented, top 7 players contribute to just ~30% of total production.

~ 70 players in ~ 70 players in MnMn alloy business : large swing capacities. alloy business : large swing capacities.

150 Furnace with size range from 4 MVA to 33 MVA150 Furnace with size range from 4 MVA to 33 MVA

Almost 15Almost 15--20% of the idle capacity unlikely to revive.20% of the idle capacity unlikely to revive.

Price dependent on local demandPrice dependent on local demand--supply but a strong correlation with world trendssupply but a strong correlation with world trends


32

25

1

25

6

28

1

37

8

37

1

40

5

38

0

46

7

56

5

73

8

85

9

84

5*

99

5

0

200

400

600

800

1,000

1,200

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2010-10

HC Ferro Manganese Silico Manganese

6. Indian Manganese Alloy Production 6. Indian Manganese Alloy Production

In ‘000 MTIn ‘000 MT

Production of Ferro Manganese has grown @ CAGR of 10%Production of Ferro Manganese has grown @ CAGR of 10%

Production of Silico Manganese has grown @ CAGR of 17%Production of Silico Manganese has grown @ CAGR of 17%

Around 25% Around 25% --30% is exported 30% is exported –– is there a potential to increase this ?is there a potential to increase this ?

Source : IFAPASource : IFAPA

* Global recession* Global recession


D. Decreasing Chinese Presence D. Decreasing Chinese Presence


7. Chinese Manganese Alloy Industry 7. Chinese Manganese Alloy Industry

China is the world’s largest China is the world’s largest MnMn Ore producer by volume and by Ore producer by volume and by MnMn

Content producing 35% of the world’s total production.Content producing 35% of the world’s total production.

China has traditionally been a large exporter of China has traditionally been a large exporter of MnMn Alloys.Alloys.

CY 2008CY 2008

MnMn Alloy Supply (World, without China)Alloy Supply (World, without China)The Change In 2009 : The Change In 2009 :

China became a net importer of China became a net importer of MnMn alloys for alloys for

the first time in August 2009.the first time in August 2009.

China has become a net importer of China has become a net importer of SiMnSiMn, ,

ironically, in past years ironically, in past years SiMnSiMn was the was the MnMn

alloy commodity that Chinaalloy commodity that China

exported the highest volume of.exported the highest volume of.

China continued to export more China continued to export more FeMnFeMn than it than it

imported, (both Ref imported, (both Ref FeMnFeMn and HC and HC FeMnFeMn). ).

Source : ERAMET, Metals ExpertSource : ERAMET, Metals Expert


7. Decreasing Competitiveness of China7. Decreasing Competitiveness of China

Power Tariff Increases Power Tariff Increases

((6.256.25--7.5 c/kWh7.5 c/kWh))

Regional & Seasonal Regional & Seasonal

Power Power ShortagesShortages

NorthNorth in Winter, in Winter,

East/South in SummerEast/South in SummerDecreased Decreased

Competitiveness Competitiveness

of of China in China in MnMn

AlloysAlloys

Increased Environmental Increased Environmental

CostsCosts

Increased Proportion of Increased Proportion of

Imported Imported MnMn OreOreCostCost Increases : Freight, Increases : Freight,

Labour & Regulatory Labour & Regulatory

CostsCosts





((6.256.25--7.5 c/kWh7.5 c/kWh))




East/South in SummerEast/South in Summer Decreased Competitiveness Decreased Competitiveness


AlloysAlloys


CostsCosts



Labour & Regulatory CostsLabour & Regulatory Costs



China biggest electricity producer & consumer in the worldChina biggest electricity producer & consumer in the world

China has been facing regional power shortages since 2002 (Liaoning, China has been facing regional power shortages since 2002 (Liaoning,

Jiangsu, Zhejiang, Guangdong provinces in particular)Jiangsu, Zhejiang, Guangdong provinces in particular)

Lack of longLack of long--distance power transmission capacity distance power transmission capacity –– no national grid, 6 no national grid, 6

regional gridsregional grids

China needs to add new annual capacity of 48GW in a steady state growth China needs to add new annual capacity of 48GW in a steady state growth

modelmodel

High dependence of China on HydroHigh dependence of China on Hydro--Power(30%)Power(30%)

Northern areas experience shortages in winter due to increased heating Northern areas experience shortages in winter due to increased heating

demand & problems with coal deliveries.demand & problems with coal deliveries.

Eastern & southern areas are prone to shortages in late spring/early summer Eastern & southern areas are prone to shortages in late spring/early summer

as temperatures & airas temperatures & air--conditioning demand rise, while reservoir levels & conditioning demand rise, while reservoir levels &

hydrohydro--electric output falls.electric output falls.

China power tariff increases China power tariff increases –– competitiveness of India increases.competitiveness of India increases.

Opportunity of India to export Opportunity of India to export ferroferro alloys in markets where China is till now alloys in markets where China is till now

dominant.dominant.

Positive Impact On Indian Ferro Alloy Producers of Power Positive Impact On Indian Ferro Alloy Producers of Power

Crisis In ChinaCrisis In China


ElectricityElectricity feefee inin ChinaChina hashas risenrisen byby 55%% fromfrom NovemberNovember ofof 20092009 (( havinghaving

resultedresulted inin newnew feefee ofof CNYCNY00..5252 (( == 77..66 USUS--CentsCents )) perper 11 KWHKWH onon averageaverage asas

thethe wholewhole countrycountry ofof ChinaChina )) and,and, accordingly,accordingly, thisthis riserise ofof electricityelectricity feefee hashas

putput anan impactimpact onon thethe costcost forfor productionproduction ofof silicosilico--manganesemanganese inin ChinaChina..

Incidentally,Incidentally, preferentialpreferential feesfees ofof electricityelectricity appliedapplied toto westwest--southsouth andand westwest--

northnorth districtsdistricts ofof ChinaChina werewere abolishedabolished fromfrom thethe beginningbeginning ofof 20102010 andand thisthis

abolishmentabolishment hashas causedcaused toto increaseincrease thethe productionproduction costcost inin thesethese districtsdistricts




((6.256.25--7.5 c/kWh7.5 c/kWh))



NorthNorth in Winter, East/South in in Winter, East/South in

SummerSummer Decreased Decreased



AlloysAlloys


CostsCosts



Labour & Regulatory CostsLabour & Regulatory Costs



7. 7. Increased Proportion of Imported Increased Proportion of Imported MnMn Ore in ChinaOre in China



Major manganese mines have risen their price of manganese ore for shipment to Major manganese mines have risen their price of manganese ore for shipment to

China in June of 2010 by 10% compared to that for shipment in May, the cost to China in June of 2010 by 10% compared to that for shipment in May, the cost to

produce manganese produce manganese ferroferro--alloys in China is thought to be inevitable to increase. alloys in China is thought to be inevitable to increase.

It seems to be certain that the cost to produce It seems to be certain that the cost to produce silicosilico--manganese in China will rise manganese in China will rise

by more than US$100 per ton. This increase of the production cost is anticipated to by more than US$100 per ton. This increase of the production cost is anticipated to

put an actual impact on negotiations to export Chinese put an actual impact on negotiations to export Chinese silicosilico--manganese for manganese for

shipments in July shipments in July -- August.August.

The price of manganese ore for China has already risen by 4.7% for May shipment The price of manganese ore for China has already risen by 4.7% for May shipment

and, by adding a further rise for June shipment, the ore price for China has risen by and, by adding a further rise for June shipment, the ore price for China has risen by

more than 15% in total for shipments in the two months of May and June. more than 15% in total for shipments in the two months of May and June.

Major manganese mines have aimed to rise price of medium grade lumpy Major manganese mines have aimed to rise price of medium grade lumpy

manganese ore (with manganese ore (with MnMn 44% ) for China to a level of US$10 per 44% ) for China to a level of US$10 per MnMn 1% CIF in the 1% CIF in the

course of 2010.course of 2010.




((6.256.25--7.5 c/kWh7.5 c/kWh))







AlloysAlloys


CostsCosts



Labour & Regulatory Labour & Regulatory

CostsCosts



The price of coke in domestic market of China is CNY1,950 The price of coke in domestic market of China is CNY1,950 --

1,980 per ton, having remained unchanged without a 1,980 per ton, having remained unchanged without a

substantial movement. substantial movement.



Power Tariff Increases Power Tariff Increases ((6.256.25--7.5 c/kWh7.5 c/kWh))

Regional & Seasonal Regional & Seasonal Power Power ShortagesShortagesNorthNorth in Winter, in Winter,


Competitiveness Competitiveness of of China in China in MnMn

AlloysAlloys

Increased Increased Environmental Environmental CostsCosts

Increased Proportion of Increased Proportion of Imported Imported MnMn OreOre

CostCost Increases : Freight, Increases : Freight, Labour & Regulatory Labour & Regulatory

CostsCosts

Apart from the increased Apart from the increased internal demand for internal demand for MnMn Alloys Alloys due to the rapid increase in due to the rapid increase in steel production, which is steel production, which is limiting Chinese exports, limiting Chinese exports, Decreased Chinese Decreased Chinese Competitiveness has resulted Competitiveness has resulted in sharp reduction in bulk in sharp reduction in bulk MnMnalloy exports from China alloy exports from China (specially (specially SiMnSiMn))



8. Chinese Manganese Alloy Exports8. Chinese Manganese Alloy Exports

ChinaChina hashas practicallypractically retreatedretreated fromfrom thethe exportexport marketmarket duedue toto highhigh

internalinternal demanddemand && decreaseddecreased competitivenesscompetitiveness inin alloyalloy makingmaking..

93% 93%

dropdrop

This presents an opportunity for India to consolidate its This presents an opportunity for India to consolidate its position as a Ferro Alloy exporter. position as a Ferro Alloy exporter.

Source : ERAMET,Source : ERAMET,


E. Opportunity for IndiaE. Opportunity for India


9. Opportunity For India ? 9. Opportunity For India ?

20082008

MnMn Alloy Supply (World, without China)Alloy Supply (World, without China) MnMn Alloy Supply (World, without China)Alloy Supply (World, without China)

20102010

Opportunity for India to :Opportunity for India to :a)a) Replace China in the international Silico Manganese trade.Replace China in the international Silico Manganese trade.b)b) Explore market opportunities in Manganese Alloys in China.Explore market opportunities in Manganese Alloys in China.This is apart from the opportunity presented by the steel growth in IndiaThis is apart from the opportunity presented by the steel growth in India

Source : ERAMET, Source : ERAMET,


10. Advantage India 10. Advantage India

Ability to immediately

scale up

* Large Capacity for Ferro Alloys* Industry currently operating at 60% of rated capacity* New capacities coming up. Capacities coming up near ports (Vizag, Haldia).

Location near high growth

regions

•Freight advantage in markets such as China, Korea & Japan compared to Ukraine or South Africa• No seasonal effects•Short sailing time, freight advantage

Cost Advantage over China

* Domestically sourced LG & MG Mn Ore available for blending with imported HG Mn Ore. Higher indigenous ore availability compared to Chinese producers.* Comparable power, labour & inland freight costs to China.


F. Key Success FactorsF. Key Success Factors


10. Key Success Factors For Indian Ferro Alloy Industry(1) 10. Key Success Factors For Indian Ferro Alloy Industry(1)

Key Issues DescriptionAction Required / Changes Taking

Place

Availability of High Grade Mn Ore

* India has limited availability of Medium to Low Grade Mn Ores* Indigenous Manganese Ore grade & quantity better than with China

* Continue to allow free import of HG Manganese Ore * Indian Ore, sweetened with HG Mn Ore suitable for SiMnproduction.

Coking Coal & LAM Coke availability & cost

* Indian coal has high ash* Exposure to availability & price of LAM coke from China

* Import of low ash coking coal for Ferro Alloy & BF Coke making in India* Blending indigenous cokes with imported LAM coke for economic considerations

Power Availability & Power Cost

* Indian average power tariff at similar level to China.* Power shortages in summer in Eastern India (hub of Ferro Alloy production)

* Power Sector reforms in place -allowing for Captive Power Plants & Power Wheeling.* Increase grid power generation.


10. Key Success Factors For Indian Ferro Alloy Industry(2) 10. Key Success Factors For Indian Ferro Alloy Industry(2)

Key Issues DescriptionAction Required / Changes Taking

Place

Small capacities, inefficient operations

•Furnaces sizes start from 4MVA * Almost 15%-20% capacity unlikely to revive.•Global furnaces moving to higher sizes.

* Consolidation taking place with significant capacity expansion by key players.* Increasingly, capacities with Captive Power Plants, Coal and ore linkages.

Infrastructural Bottlenecks

* Inadequate roads, railway network capacity & ports for handling large scale ore imports & ferro alloy exports

* Encourage FDI for rapid infrastructure development; Special Economic Zones* Special Freight Corridors


Can We Do It ?Can We Do It ?


Backups


Coincidentally, one day before, Coincidentally, one day before, the following article appeared in the following article appeared in

the Tex Reportthe Tex Report


Vol.42, No. 9964 Vol.42, No. 9964 THE TEX REPORT THE TEX REPORT Wednesday, May 12, 2010Wednesday, May 12, 2010

Cost To Produce SilicoCost To Produce Silico--Manganese In China Moves To Rise By US$100 / Ton = Manganese In China Moves To Rise By US$100 / Ton =

Owing To A Rise Of 10% For Price Of Manganese Ore To Be Imported By ChinaOwing To A Rise Of 10% For Price Of Manganese Ore To Be Imported By China

In consequence of that major manganese mines have risen their price of In consequence of that major manganese mines have risen their price of

manganese ore for shipment to China in June of 2010 by 10% compared to that manganese ore for shipment to China in June of 2010 by 10% compared to that

for shipment in May, the cost to produce manganese for shipment in May, the cost to produce manganese ferroferro--alloys in China is alloys in China is

thought to be inevitable to increase. It seems to be certain that the cost to produce thought to be inevitable to increase. It seems to be certain that the cost to produce

silicosilico--manganese in China will rise by more than US$100 per ton. This increase of manganese in China will rise by more than US$100 per ton. This increase of

the production cost is anticipated to put an actual impact on negotiations to the production cost is anticipated to put an actual impact on negotiations to

export Chinese export Chinese silicosilico--manganese for shipments in July manganese for shipments in July -- August.August.

The price of manganese ore for China has already risen by 4.7% for May shipment The price of manganese ore for China has already risen by 4.7% for May shipment

and, by adding a further rise for June shipment, the ore price for China has risen and, by adding a further rise for June shipment, the ore price for China has risen

by more than 15% in total for shipments in the two months of May and June. The by more than 15% in total for shipments in the two months of May and June. The

direct cost to produce direct cost to produce silicosilico--manganese at plants in China is presumed to total to manganese at plants in China is presumed to total to

US$1,407 per metric ton, comprising three main factors of manganese ore as raw US$1,407 per metric ton, comprising three main factors of manganese ore as raw

material, coke as a reducing agent and electricity fee. material, coke as a reducing agent and electricity fee.

The price of coke in domestic market of China is CNY1,950 The price of coke in domestic market of China is CNY1,950 -- 1,980 per ton, having 1,980 per ton, having

remained unchanged without a substantial movement. remained unchanged without a substantial movement.


Also,Also, electricityelectricity feefee inin ChinaChina hashas risenrisen byby 55%% fromfrom NovemberNovember ofof 20092009 (( havinghaving

resultedresulted inin newnew feefee ofof CNYCNY00..5252 (( == 77..66 USUS--CentsCents )) perper 11 KWHKWH onon averageaverage asas thethe

wholewhole countrycountry ofof ChinaChina )) and,and, accordingly,accordingly, thisthis riserise ofof electricityelectricity feefee hashas putput anan

impactimpact onon thethe costcost forfor productionproduction ofof silicosilico--manganesemanganese inin ChinaChina..

Incidentally,Incidentally, preferentialpreferential feesfees ofof electricityelectricity appliedapplied toto westwest--southsouth andand westwest--northnorth

districtsdistricts ofof ChinaChina werewere abolishedabolished fromfrom thethe beginningbeginning ofof 20102010 andand thisthis

abolishmentabolishment hashas causedcaused toto increaseincrease thethe productionproduction costcost inin thesethese districtsdistricts..

WhileWhile priceprice ofof ChineseChinese silicosilico--manganesemanganese forfor exportexport hashas risenrisen fromfrom April,April, inin viewview

ofof anan instabilityinstability ofof thethe foreignforeign exchangeexchange causedcaused byby aa crisiscrisis ofof thethe financialfinancial marketmarket

inin Greece,Greece, thethe priceprice ofof ChineseChinese silicosilico--manganesemanganese toto importimport intointo JapanJapan hashas hadhad aa

hesitationhesitation..

BecauseBecause ofof highhigh pricesprices ofof rawraw materials,materials, aa possibilitypossibility toto reducereduce priceprice ofof ChineseChinese

silicosilico--manganesemanganese forfor JapanJapan isis unlikelyunlikely toto arisearise butbut anan atmosphereatmosphere toto riserise priceprice ofof

ChineseChinese productproduct forfor exportexport hashas beenbeen notnot feltfelt..


TheThe negotiationsnegotiations withwith electricelectric furnacefurnace millsmills inin JapanJapan onon YenYen priceprice ofof silicosilico--

manganesemanganese forfor shipmentsshipments inin JulyJuly –– SeptemberSeptember quarterquarter willwill bebe takentaken placeplace inin duedue

coursecourse ofof timetime and,and, therefore,therefore, thethe tradingtrading companiescompanies concernedconcerned havehave takentaken anan

attitudeattitude toto watchwatch carefullycarefully aboutabout furtherfurther movementsmovements ofof thethe marketmarket..

ByBy takingtaking intointo accountaccount ofof thethe clearclear factorsfactors toto raiseraise thethe productionproduction cost,cost, ChineseChinese

shippersshippers havehave targetedtargeted toto exportexport silicosilico--manganesemanganese atat aa highhigh priceprice ofof USUS$$11,,700700

perper metricmetric tonton CIFCIF JapanJapan butbut IndianIndian silicosilico--manganesemanganese isis nownow beingbeing offeredoffered atat

USUS$$11,,580580 -- 11,,630630 perper metricmetric tonton CIFCIF JapanJapan onon aa centercenter ofof USUS$$11,,600600 CIFCIF and,and,

accordingly,accordingly, aa highhigh priceprice ofof ChineseChinese silicosilico--manganesemanganese asas mentionedmentioned aboveabove isis

thoughtthought toto bebe difficultdifficult toto workwork onon thethe marketmarket inin JapanJapan..

ItIt waswas informedinformed thatthat majormajor manganesemanganese minesmines havehave aimedaimed toto riserise priceprice ofof mediummedium

gradegrade lumpylumpy manganesemanganese oreore (with(with MnMn 4444%% )) forfor ChinaChina toto aa levellevel ofof USUS$$1010 perper MnMn

11%% CIFCIF inin thethe coursecourse ofof 20102010.. Therefore,Therefore, therethere isis aa viewview inin thethe marketmarket thatthat pricesprices

ofof manganesemanganese oresores inin thethe secondsecond halfhalf ofof 20102010 willwill stillstill maintainmaintain aa firmfirm tonetone..


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