The recent soaring prices of ferro silicon and ferro chrome in China show a clear impact on the Indian market. This is because the Indian smelters often turn to China since it enjoys the largest market share. The recent Chinese power curtailments have pushed Indian ferro alloys prices to unimaginable highs.
Further hike in prices expected?
Indian prices are at record highs across all bulk alloys and the situation is risky for most of the mid-level traders and steel manufacturers. Most of the sellers are trying to hoard material and sell very limited quantities as they anticipate a further hike in prices.
Although HRC and CRC prices in India registered a growth of 59% and 50% y-o-y respectively in Sept’21, the hike in ferro chrome and ferro silicon prices are nerve-wracking for the Indian steel market.
However, the prices for ferro chrome and ferro silicon are at an all-time high and there is probably no respite in the offing. The production cuts in China are not improving anytime soon and Indian smelters would benefit directly from this.
Ferro silicon offers are now at around INR 200,000/t, up a whopping 142% from the previous year’s levels. Producers are now aiming to match export offers from China.
Meanwhile, due to production restrictions and severe cuts in output in China, the imported material is costing around INR 300,000/t CIF India. China caters to around 16% of the Indian ferro silicon market.
In addition, Bhutanese smelters are still delivering their previous orders and major ferro silicon smelters in Bhutan and Guwahati are catering to long-term domestic contracts leaving a very small quantity for spot trading.
Therefore, the Indian buyers have no option but to buy from the Guwahati-based producers, which is further adding up to the whopping price sentiments.
For ferro chrome, China is its largest importer, with around 50% of the total exports to China from India. Due to the dual control policy in China, ferro chrome output has been hit by around 35-50% in some of the major producing provinces.
Ferro chrome prices are hitting new highs and the current offers in the Indian market are up to INR 135,000/t ex-Jajpur, higher by 80% higher compared to the previous year, and by INR 5,000/t from the last highest prices of INR 130,000/t seen in mid-Aug’21.
Major stainless-steel mills remain worried about the procurement of ferro chrome as prices are significantly high, and the traders are trying to take positions in expectation that prices may increase further.
Uncertain policy takes a toll on buyers
The Chinese steel mills are the worst affected as they remain uncertain on policies and whether they would be allowed to run the plants in the coming weeks. This is restraining them from acquiring bulk imports and are obliged to depend on the spot market at much higher prices.
Outlook
The Chinese power crisis has just begun and the worst days are yet to come as winter approaches. It is highly unlikely that the steel industry might find some support in the upcoming weeks.
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