Indian ferro chrome prices came down significantly by INR 1,000-1,500/t in line with dull demand in domestic and exports market. Since India relies heavily on ferro chrome exports, dull demand from exports have an immense negative effect on the prices of ferro chrome.
Why such fall in prices despite high ore prices?
Domestic ferro chrome producers are currently selling material at little to no profit margins, as they need to liquidate stocks. Most of the producers have refrained themselves from exports as the prices are even lower than domestic levels. However, this is having a cascading affect on the prices of ferro chrome as oversupply has hit the market and buyers now hold a better place at negotiating, thus the prices are falling continuously and even higher prices of chrome ore can’t hold the ferro chrome prices.
Why such indentation on exports market?
China is the biggest market for Indian ferro chrome exports. Meanwhile, Indian exports counts to only 10pc of their total ferro chrome imports by China. Moreover, the continuous increase in the ferro chrome production in China, and the geo-political issues between the two countries, Chinese imports from India have taken a dip.
Why Indian prices are higher as compared to international market?
While, most of the countries were hit only by Covid, India was first hit by covid led loss of production, then production loss due to closure of major mines that went under auctions and then by monsoons, which led to the extreme scarcity of material and the prices for ferro chrome inflated. This was the trend in the domestic market, however, the global market regained momentum after the Q2 CY20 lockdowns and thus the prices back to normal levels.
Chinese Market:
Tsingshan Group, one of the largest producers of Stainless steel, has reduced the purchase price of HC ferro chrome today by 100 yuan/t to 5,897 yuan/t ($877.60/t) for HC 50% min, delivered including tax. The fall in the prices can be attributed to the falling demand of ferro chrome and downstream Stainless-steel prices in China.
Current Assessments:
Ferro chrome prices are assessed at INR 68,500-69,000/t Ex-Jajpur. Most of the producers are waiting for OMC’s notification for auction of regular grades of Chrome ore. Meanwhile, the demand in the export market remains dull with near to absent deals in the spot market with prices for CNF China at around cents 68/lb, CNF Japan at cents 71/lb and CNF South Korea at cents 70/lb.
Outlook:
Considering the falling prices of ferro chrome in China and the down trending stainless steel market, Indian domestic prices will remain under pressure. However, all eyes are also on the quantum of export duty that will be announced on chrome ore exports.
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