The future of Ferro Alloys industry largely depends on the demand and supply in the market, which in turn depends upon improvement of global economy
The fortune of Ferro Alloys industry is linked with the Steel industry. Indian economy is expected to grow parallel to steel production. Increase in per capita consumption of steel will push up demand and production. The per capita steel consumption of India is quite below the world average i.e. around 57kg against 215 kg of the world’s consumption. Indian Ferro Alloys industry’s future depends on the steps taken by the Government of India to boost sentiments of the manufacturers in general and Iron & Steel industry in particular. Government will take efforts to enhance the steel capacity to 89 MnT in FY 14 through its various policies and co-ordination.
The present estimated production for Ferro Alloys in India is about 4.8 MnT against domestic demand of 3.3 MnT during FY13. Expecting an increase in the domestic demand for Ferro Alloys, many Manganese alloys units have come up in the country. These units have added 0.7 MnT pa capacity plants in various states such as West Bengal, Andhra Pradesh etc.
Ferro Alloys is a power intensive industry. About 35-40% of total production cost is spent on power. The balance is attributable to the cost of ore and other ingredients. India is presently positioned as the eleventh largest producer of energy, representing roughly 2.4% of the overall energy output per annum. Coal based power generation remain major contributors for meeting the energy demand in the country. It will continue to play a dominant role in Indian Power sector owing to the increasing demand for thermal coal in the country. Presently, most of the Ferro Alloys manufacturers are also engaged in generation of power for captive use and sell additional power in short term market through merchant sale with a view to optimize revenue and profitability .
In light of continued Y-o-Y increase in peak power deficit, the government is aggressively targeting capacity commissioning with focus on large-scale thermal plants. There still remain regulatory complexities at the state level that is delaying generation of additional power plants. Progress in terms of sector reforms remain slow.
The availability of major raw material for Ferro Alloys industry such as manganese ore for manganese alloys, chrome ore for Ferro chrome, along with coke, quartz and fluxes etc is not satisfactory in the country. Due to the huge demand of ore and scarcity of good quality raw material in the country, ore prices have been increasing every day since industry has a huge demand for ore. In India, manganese ore is available with MOIL, a government owned enterprise, which is the largest ore producer and other manganese ore producers such as Odisha mining Development Corporation (OMDC), Tata Steel, Sandur Manganese, Rungta Mines etc. Also, some small private mine owners in Madhya Pradesh, Odisha and Karnataka are producing very little quantity of ore. The industry requirement for ore is not being fully met by the domestic supply; only 45% of the total demand is being fulfilled by the domestic mining industry and rest of the ore imported. Hence, the industry is quite dependent on imports.