India: Ferro chrome prices drop amid selling pressure

Indian ferro chrome prices dropped by around INR 1,000/tonne (t) w-o-w amid intense selling pressure from weak domestic and export markets.

According to SteelMint’s assessment on 07 July, producers offered at around INR 105,500-106,500/t exw-Jajpur. However, around 1,000 t of deals have been concluded at around INR 105,500-106,000/t exw-Jajpur.

Why did producers face selling pressure?

• Weak demand: Stainless steel production cuts amid a bearish market caused domestic buyers to book fewer quantities. In the meantime, smelters were only able to sell in the domestic market due to low export demand. As a result, they had to sell at lower prices.
• Stainles steel prices down w-o-w: According to the assessment on 5 July, prices for stainless steel 304 grade HRC were at INR 235,000/t exw-Mumbai, down by INR 1,000/t w-o-w. Therefore, smelters wanted to clear their stocks before further declines. This also created selling pressure.
• Material oversupply: The majority of the plants are operating at full capacity, while some smelters switched back to producing ferro chrome from manganese alloys. In contrast, thin trading was observed this week amid muted demand. Overall, supply-demand mismatch intensified oversupply and created selling pressure.

Outlook:
The short-term outlook for ferro chrome prices looks bleak as demand is expected to remain subdued amid bearish stainless-steel sentiments. In spite of this, producers refuse to lower prices further because coke prices are not falling as expected. Additionally, higher electricity tariffs across regions are also forcing them not to lower prices, sources said.