This shows how desperate the power situation is in Europe. The Ukraine is a major supplier of manganese alloys in Europe. This will push up manganese alloy prices up further.
The power cost increase is substantial.
"Ukraine energy prices jumped more than 25% to 2,175 hryvnia ($94) per 1,000 KWh in October"
Thats US$0.094/kWh which is 3x OM Sarawak. The power requirement is less for manganese alloys vs. ferrosilicon, however the price they receive for FeSi would currently far exceed their production cost, although it not much only 6,000 to 6,500/t/month. this would equal 3 of OM Sarawak furnaces, so currently with 6 FeSi furnaces operational means OM Sarawak produces 2 x Ukraine.
OM Sarawak would be making more than US1,000/t profit at these SiMn prices " ($2,198-2,314) per tonne on Friday"
Major Ukraine ferro-alloys producers slash output in October
October 11, 2021
15:37 GMT
The two biggest ferro-alloys producers in Ukraine - Nikopol and Zaporozhye - are almost halving production of manganese alloys in October due to surging electricity prices, a source told Fastmarkets on Monday October 11.
The Privat Group, which owns the facilities is shutting five of its 13 furnaces at Nikopol, cutting its monthly manganese alloys output to 35,000 tonnes, from 65,000 tonnes in September. It is also idling two silico-manganese furnaces at Zaporozhye, cutting monthly production there by 5,000 tonnes in October. Zaporozhye's monthly ferro-silicon production is unchanged at 6,000-6,500 tonnes, the source said.
“No-one is interested in cutting production volumes, but at this stage the situation is such that an increase in the cost of electricity entails a reduction in profitability, and hence a reduction in production. And no one will work at a loss for themselves," Nikopol chairman Vladimir Kutsin said.
Ukraine energy prices jumped more than 25% to 2,175 hryvnia ($94) per 1,000 KWh in October, from 1,650 hryvnia per KWh in September, according to the Ukrainian Association of Producers of Ferroalloys & Other Electrometallurgical Products (UkrFA). Last year the average monthly energy price in Ukraine was 1,295 hryvnia per KWh.
The move to cut ferro-alloys production by Privat follows a strong rally in manganese alloys prices this month after news that Slovakia's OFZ plans to halt more than half of its furnaces due to sharply higher energy prices.
Manganese alloys prices in Europe jumped sharply last week, while silico-manganese prices in Europe increased 20% on October 8 to reach their highest level since Fastmarkets began assessing the market in January 1997. High-carbon ferro-manganese prices, meanwhile, jumped 12.6% to match a record peak last seen in October 2008. These price moves follow shrinking output across Europe, with production cuts also reported in Spain and Slovakia.
Manganese alloys availability is tight for prompt demand and replacement costs are expensive given the current logistical uncertainty and reduced production elsewhere in the world due to the Covid-19 social restrictions. Surging electricity costs, both in Europe and elsewhere have helped too cement a record rally in international bulk alloys prices.
Fastmarkets’ price assessment for silico-manganese, lumpy, 65-75% Mn, basis 15-19% Si (scale pro rata), major European destinations was €1,900-2,000 ($2,198-2,314) per tonne on Friday, while Fastmarkets assessed the price of high-carbon ferro-manganese, basis 78% Mn max, standard 7.5% C, delivered Europe at €1,800-2,000 per tonne. Privat mainly sells its ferro-alloys output to domestic steelmakers in Ukraine, but also ships volumes to steel mills and alloys traders in Europe.
Ukraine exported about 25,000 tonnes of silico-manganese in the first eight months of 2021, compared with around 50,000 tonnes or the whole of 2020. The country exported about 90,000 tonnes of ferro-silicon in January-August 2021, compared with about 180,000 tonnes in total over the whole of 2020.
The end-user markets for manganese alloys in construction and in the automotive sector are showing signs of a strong return to growth this year, while there have been steel supply shortages in Europe and only limited import availability due to container shortages and trade protection measures.
Silico-manganese is used to make long steel for the construction sector, such as rebar and wire mesh. Ferro-manganese is used as a deoxidizer in steel production and in finished products for vehicle manufacture and stainless steel. So steel mills tend to use ferro-silicon and ferro-manganese together when making the flat steel typically used in carmaking.
Nikopol made more than 200,000 tonnes of manganese alloys in the first quarter of 2021, up by almost one-fifth year-on-year and up by more than 50% since December. Nikopol Ferroalloy Plant and Zaporozhye Ferroalloy Plant produced almost 250,000 tonnes of manganese alloys in the first four months of 2021, down by more than 10% year-on-year. The decline in production was thought to be a result of measures to combat the spread of the Covid-19 pandemic.
Ukraine typically imports most of its manganese ore from Ghana, and bought in almost 125,000 tonnes in the first four months of 2021.
OMH Price at posting:
$1.19 Sentiment: Buy Disclosure: Held
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