Indian ferro chrome prices have come down in this week amidst weak export market and few producers in urgent need for cash concluding deals in the domestic market at lower levels.
OMC today declared the base prices for the upcoming auctions, which is 45% higher than the May levels. Although, the producers were expecting OMC to increase their prices but such a whopping increase has shocked the producers.
Most of the smaller producers who are dependent on OMC are now wary of the situation, as they expect the auction to receive very aggressive bidding. They suspect that the chrome ore prices might reach an all-time high making the production cost to go up to around INR 70,000/t.
However, TATA has started the mining in Sukinda, and if they supply in the open market, the scarcity might be nullified, and the prices may also, stabilize. The smaller producers are also waiting for a clarification from TATA whether they will continue with the conversion or they may sell in the open market.
We at SteelMint believe that it will not be feasible for Tata Steel to sell chrome ore in the market with such high premiums.
Meanwhile, this week the inquiries from the export market remained limited as the major buyers viz., China, Korea, Japan and Taiwan are going for a week-long holiday. The Chinese tenders are also expected to be released after the holidays, and we estimate that the tender prices by the major stainless mills might roll over or increase marginally for October.
Outlook
Producers in the domestic market are waiting for the OMC auctions to figure out what should be the ferro chrome prices. Meanwhile, demand from the export market is expected to pick up after the first week of October and that should lend support ferro chrome prices.
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