Indian ferrochrome prices fell down w-o-w owing to the slow buying tendency before the Chinese ferrochrome tenders. Meanwhile, the demand was also affected by the year-end lull in the domestic market. Thus, producers were forced to lower the prices for ferrochrome in line with falling export prices.
Currently, prices in the domestic market are at INR 95,000-96,000/t Ex-Jajpur and around INR 97,000 Ex-Durgapur. However, later last week few deals were concluded at marginally higher levels before the Holi festival.
Chinese ferrochrome production still to recover
Chinese ferrochrome production has increased in the southern provinces, but it is still not sufficient to mitigate the fall in production from Inner Mongolia. Many regions in Inner Mongolia remain affected by energy consumption limitations and power outages as the energy limitations got stricter in March. It is expected that the production might be lower by around 30% as compared to the previous month.
South African UG2 prices fell to $165/t
South African UG2 prices dropped significantly by $15/t to $165/t CIF China, owing to lower buying tendency from the Chinese market. The inventory of chrome ore is piling up at the ports and high chrome ore prices are not finding acceptance due to the lower production of ferrochrome. Although, the prices of chrome ore increased after ferrochrome prices shot up, yet the declining stainless-steel prices in China curbed the buying interest of the smelters.
The export market remains lacklustre for the second straight week
Indian exporters remained anxious due to the low inquiries from overseas market. Indian producers are wary of the ferrochrome prices in China and the reduced inquiries from the market. Meanwhile, exporters from India have lowered their offer levels to 104 cents/lb, but no export deals were concluded this week as buyers awaited Chinese tender prices before taking positions. However, it is expected that the CIF China prices might come down to cents 102/lb after TISCO reduced the ferrochrome tender prices by RMB 350/t for Apr ’21.
High Possibility of Durgapur based smelters to shift to manganese alloys
There is a high possibility that the Durgapur based ferrochrome producers might shift to producing manganese alloys. Manganese alloys prices have been rising since the start of the month as the market is hit by supply shortage and producers are unable to cater to the domestic market. Hence, better profit margins in manganese alloys might lure the smelters of this region to shift from ferrochrome to manganese alloys.
Indian Stainless-steel mills resist buying
Stainless-steel mills resisted buying at higher levels as they believed that the prices will come down further after the Chinese tender prices are released. Meanwhile, the tepid response to the last Vedanta auction further strengthened the belief of the buyers that the prices could come down to INR 92,000/t. However, the producers are also unwilling to sell at such levels due to higher production cost, which is currently at around INR 93,000/t for a smelter without captive power and chrome ore supply, as learned from credible sources.
Market participants await chrome ore auctions
Producers and buyers of ferrochrome are both waiting for the upcoming OMC Chrome ore auctions to deduce the production cost. Meanwhile, there is an expectation in the market that the chrome ore prices will be reduced in line with the lower prices of ferrochrome.
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