The rise of electricity price in Andhra Pradesh, India will affect manganese alloy producers

As part of fiscal year 2024 (from April 2023 to March 2024), Andhra Pradesh, India, where manganese alloys are produced in large quantities, will increase the electricity price by 15% to 7.05 rupees (0.086 US dollars) per kilowatt hour from April 1. This will bring enormous pressure to manufacturers who are already in trouble. Meanwhile, it has little impact on the chromium alloy market.  

Considering that the proportion of electricity in the alloy cost structure may reach as high as 60%, local ferroalloy manufacturers are concerned about further competitiveness. However, to a greater extent, this is related to manganese alloy producers in the region.

According to Hainan West Asia Ferroalloy Group’s research,in the face of extremely weak demand, the quotation for silicon manganese (65% Mn; 16% Si) is $970-990 FOB (down $20 month on week), alloy (60% Mn; 14% Si) is $880-890 FOB (down $5), and iron manganese (75% Mn) is $950-970 FOB (down $35). Therefore, the increase in electricity prices has increased the production cost of silicon manganese by $60-70. A producer in India commented, "When setting new prices, it is important to consider the need to compete with Malaysia, as Malaysia's electricity prices are much lower. The electricity price in Malaysia is approximately $0.03 per kilowatt hour.

Due to tariff increase, most manganese alloy suppliers from Andhra Pradesh temporarily left the market and reassessed the alloy cost. In addition, the local company also submitted a letter to Power Surrender requesting them to reconsider this decision.

Conversely, the impact on the chrome alloy market will be negligible, because Andhra Pradesh's ferrochrome production capacity is negligible, and the alloy cost will increase by an average of 0.03 US dollars/pound of Cr.

However, there are unconfirmed reports in the market that electricity prices will not increase due to subsidies of 101.35 billion rupees (1.23 billion US dollars) provided by the local government.

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