India: Supply-demand mismatch leads to a spike in ferro chrome prices

Indian ferro chrome prices have been climbing for a couple of weeks as the market is experiencing supply shortage as well as increased export demand for the past few weeks. The Russia-Ukraine conflict turned out to be an opportunity for Indian bulk ferro alloys producers (including ferro chrome producers) to achieve good profit margins.

According to SteelMint’s assessment on 2 March, Indian producers floated offers at around INR 112,000-113,500/t exw-Jajpur. However, some producers concluded exports deals at higher prices.

Factors attributed to the spike in ferro chrome prices-

• Supply shortage: The Russia-Ukraine crisis has boosted manganese alloys prices. Hence, several Durgapur-based producers have shifted their production from ferro chrome to manganese alloys which has created supply shortage, thus, supporting domestic ferro chrome prices.
• Demand picks up: After observing a hike in prices, domestic steelmakers began booking the material in fear of further hike in prices. In the meantime, Indian producers are receiving good inquiries from seaborne buyers, primarily from Europe and Japan as they used to import ferro chrome from Russia, but due to Russian sanctions, the buying interest has shifted to Indian material. SteelMint reported around 2,000 t of ferro chrome transactions in both the domestic and export markets this week.
• Stainless steel prices rise: Stainless steel prices have risen owing to the substantial hike in nickel prices amidst supply constraints. This is also encouraging producers to keep their offers up.
• Chrome ore prices firm: Imported UG2 prices are also at the higher side w-o-w on active buying. UG2 prices (40-42%) are hovering at around $ $210-220/t CNF China while Turkish chrome ore (46-48%) is being traded at around $ 350-365/t CNF China.

Outlook
Indian ferro chrome prices are expected to increase in the coming week owing to a better  outlook in the stainless steel market. Meanwhile, improved prices in the European and Japanese market are also expected to provide support to Indian prices.