India: Ferro chrome prices remain rangebound on sluggish export demand

Indian ferro chrome prices rose early this week due to increased production costs, although export demand remained sluggish. Prices remained rangebound as China faced a renewed upsurge in Covid cases, which squeezed demand for Indian ferro chrome. However, producers held their prices steady because of the improved upstream and downstream markets.

According to SteelMint’s assessment on 16 Mar’22, producers are offering material at around INR 134,000-135,000/t exw Jajpur. However, some major producers started offering at higher levels in the domestic market at around INR 140,000/t, although such high prices lack market acceptance, creating substantial pressure.

Highlights
Slow export demand: India’s export market received low enquiries due to the growing number Covid cases in China and South Korea. A number of Chinese provinces are on lockdown due to the country’s zero-Covid policy, which forced steel producers to reduce production. This resulted in fewer enquiries and created pressure on prices for Indian ferro chrome.

• Raw material prices upbeat: Global chrome ore prices remain firm. The price sentiment in South Africa is relatively high. In addition, the hike in shipping costs has driven the price sentiment to an even higher level. In the domestic market, chrome ore prices are running strong. However, rising coal prices on the surge in energy prices has increased the cost of ferro chromium production. However, muted demand resisted domestic ferro chrome prices from increasing further.
• OMC hikes base price for chrome ore auction: OMC had raised the base price for its chrome ore auction concluded yesterday. Increasing production costs have encouraged ferro chrome smelters to raise their offers. Buyers’ reluctance to book at higher prices has, however, compelled producers to keep ferro chrome prices rangebound.
• Stainless steel prices on higher side: Stainless steel prices are still high due to a strong upstream market. The stainless steel futures market, too, remains volatile. Stainless steel futures have been impacted by the rapid rise in nickel prices. The market remains on a low key due to weak spot transactions amid cautious attitude of buyers.

Outlook
Ferro chrome demand is weak. Buyers are on the sidelines in anticipation of a price correction in the near term. Further, rising Covid cases in China may also eventually lead to a downward revision in prices, although the price of ferro chrome is difficult to forecast because higher production costs are supporting it.