The Indian ferro chrome market has been witnessing a sudden green shoot of optimism since the start of the week. In the past five weeks, the market remained gloomy with Chinese demand waning, making the sellers more desperate for booking orders in the domestic market, resulting in lower prices.
However, the Indian smelters are witnessing higher inquiries from Chinese traders for ready shipments. Although the interest is still low for further shipments and the price realisations are also lower than the domestic levels, the Indian smelters succeeded in booking significant quantities in the Chinese market at around 117-118 cents/lb CNF China.
Currently, prices in the Indian market are at around INR 111,600/tonne (t) ex-Jajpur, with some smelters offering higher prices. SteelMint reported some small deals at much higher levels of INR 114,000/t ex-Jajpur.
Chinese ferro chrome producers struggle to complete contracts
The pessimistic scenario in the domestic market changed after ferro chrome production in China fell amidst severe electricity supply shortage. As per market sources, the companies in Inner Mongolia are running short on inventories and are looking for material in the spot market from their counterparts to fulfill their existing orders. This is expected to further support the Indian market and the export realization might get better sooner.
Increased coke prices worry the smelters
The prices of coke increased significantly in recent weeks on tepid supply. Some ferro chrome producers also reported that they were not able to get enough supplies despite agreeing to the higher costs. However, this rising concern amongst this highly power intensive industry might further trigger the increase in prices. According to SteelMint, the prices of met coke increased by 51 % since the start of the month to INR 49,000/t for CSR 64% exy-Cuttuck, in which the prices increased by INR 8,000/t w-o-w, further increasing the production cost.
Indian stainless-steel mills worried on increased raw material cost
Although the international prices for stainless steel in the Chinese futures are at record highs, the smelters are concerned over the rising ferro chrome and nickel prices. According to some of the ferro chrome smelters in India, the stainless steel producers are also panic-buying in anticipation of an increase in ferro chrome prices, as Chinese supplies of ferro chrome get tight. The escalating ferro silicon price trend is acting as a catalyst to the panic amongst the buyers and the SS producers are trying to secure more inventory.
Outlook
As Chinese supplies further get scarce, import demand from the country is likely to increase. In addition to this, increased coke prices would increase the production cost for the smelters. Meanwhile, most of the sellers are low on inventory which might further support the increase in prices.
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