India: Ferrosilicon prices hit historical highs amidst supply shortage

Indian ferrosilicon price hit 14-years high owing to a severe supply crunch in the domestic market. Bhutanese producers are still facing dispatch-related issues while Northeastern producers remain overbooked.

Currently, the offer levels differ depending on the inventory available with the producers. In Bhutan, trade has been concluded at around INR 118,000/t while in Guwahati prices are much higher with deals at around INR 121,500-122,000/t Ex-works. Meanwhile, few producers are quoting much higher for immediate shipments.

Key features:

Bhutanese supplies remained interrupted 
Bhutanese producers are still trying to clear the backlog orders, therefore are unable to take orders for immediate dispatches. Meanwhile, the disruption was intensified due to the delay in the extension of BIS certification. Currently, producers are not offering material in the market. Meanwhile, few units in Bhutan have also suspended operations due to a surge in Covid cases in the plant.

Meghalaya and Assamese producers remain overbooked 
Most of the producers in Meghalaya remain oversold, as they were operating at much lower production levels due to load shedding. However, since past two days, the power has been normal but uncertainty looms over the market about the recurring power cuts. In Meghalaya, producers are also offering as high as INR 135,000-140,000/t for immediate dispatches as they cannot divert their pre-existing orders and take new orders.

Vehicle shortage amidst subsequent lockdowns 
Truck availability is an issue due to subsequent lockdown in various parts of the country. Meanwhile, Meghalaya has also enforced lockdown, which is creating labour shortage and thus dispatches remain affected. Meanwhile, Bhutanese suppliers also remain concerned as they too face labour availability issues amidst border closures and increasing cases in the country.

Outlook 
Producers remain worried about the closure of induction furnaces due to oxygen shortage. However, with the increased supply and dispatches concern, the market is affirmative of such high prices and expects the prices to sustain for a short while.