This price level is almost half of what was prevailing about two years ago after which the market had dropped continuously and then held steady around Rs 22,500 for quote some time. Below this level it would be hadly possible for any Indian producer to break even and therefore there was no temptation to go down further.

But the crash in the world prices as also slack demand in the export and local market and the permission to sell 25 per cent of their production for EOUs in the local market has driven the prices down further. Supply in the domestic market has increased while the demand is falling or stagnant. Therefore, the domestic high carbon ferro chrome producers will see very bad days in 1999.

It is also stated that some of the companies who getcheap NTPC power for export production are also diverting their production in the local market aggravating the over supply. If the situation continues the present way government may have to cut off NTPC power to ferro alloy units. And to many NTPC has been the life line to survive as grid power is much too expensive and all the units depending on it will have to close down as has happened in MP and Karnataka.

The competition has also spread to manganese alloys field where large orders are bagged at Rs 17,500 per tonne and also sillco managanese at Rs 19,000. The West Bengal units are offering managanese alloys at the lowest prices and others have to compete with it. The steel industry being in the worst possible shape is quite happy at the turn of events in the ferro alloys field.

It is reported Sandur Manganese has closed down all the three furnaces and given voluntary retirement to all the 700 workers and staff, thus bringing an end to nearly 40 years of working in the pig iron and ferro alloys field.Sandur had three furnaces two of 24 MVA and one of 18 MVA producing ferro sillicon and manganese alloys and when power rate went to 420 paise per kwh it closed the works for domestic production.

It got some NTPC power but when its rate went up 230 paise it could not produce for export and had no choice but to close down. With no hope on any side it had to go for the final act of closure. But Sandur has extensive manganese ore properties and exports nearly 250,000 tonnes of manganese ore to Japan, Pakistan. It is continuing its manganese ore operations and will continue to do so until there is a market for its ore. The ore is mostly low grade with 38 per cent manganese but it also produces about 70,000 to 100,000 tonnes of medium grade ore of 44 per cent manganese for which it will have to find a market.

Universal Ferro and Allied Chemicals it is reported is likely to open after closure of more than two years. But whether reopening the facilities is wise when the Industry is completely uneconomic remainsto be seen. It will only add to the surplus as UFA has capacity of nearly 100,000 tonnes and this capacity with the Maharashtra state power is not economic.

It is time that the country realises that ferro alloys industry in most of the states is not viable at all and the units should be allowed to close down. Since there is excess capacity there is not likely to be any hsortage of the item.

While the high cost units close down in Maharashtra, Karnataka, Andhra units in Orissa and West Bengal and those who have captive power or have alternative sources of power will do well and the prices will rise and make the industry viable.

For instance in Ferro sillcon Bhutan is emerging as a source of supply and there are plans to double the capacity in Bhutan. Indian efficient units like IMFA and Nava Bharat are competing with bhutan while the high cost units like VISL and Sandur have closed down. This is an inevitable trend.As the economy opens up and duty levels come down, ferro alloy units in the country willhave to consolidate and become low cost. This is world wide trend 100. Elkem of Norway for instance, one who enjoys very low power cost, has decided to sell off its manganese alloys business to Eramet of France. This is because Elkem which has no source of manganese ore had tied-up with BHP of Australia for its manganese ore.

Now BHP's manganese ore business has been sold off to Billiton which owns Samancor one of the largest manganese and chrome alloys producer in the world and Elkem knows that it cannot compete with Samancor. So it has sold to Eramet, which owns large manganese ore mines through Comilog in Ghana. So the manganese alloys business in the world market will be controlled by two gianst who have both cheap manganese ore and power.

Then there is Ukraine and China which too are big producers manganese alloys and these four with Brazil will decide the manganese alloys buisness in the world. Some Indian producers like Ispat and Nava Bharat also export about 60,000 tonnes of manganese alloys aresmall players but they will continue to survive, while most others will close. It is an inevitable trend.