Indian ferro chrome prices in the domestic market has been stable this week before the OMC auctions. Although the demand is yet to pick up, producers are now firm with their offers as market participants believe that the prices have bottomed out.
Ferro chrome producers are keeping a watch on the upcoming OMC auctions, that are to be held tomorrow. There was an anticipation that OMC would reduce the base prices by at least 10% as compared to the previous month’s base price. However, the base price was reduced by a mere 4% m-o-m, and yet the producers are confident that the weighted average prices will be lower than the previous month for the following reasons:
- Most of the major producers are now booked for the month and have reduced their operations to cater to only the previously booked quantities. Hence, the requirement would be less as compared to previous months.
- TSML is set to dispatch around 40kt of chrome ore in December, which has sent a sigh of relief to the producers of ferro chrome, as the ore availability issue will be mitigated.
- Inquiries from the exports market is still lagging, which would discourage the smelters to bid higher prices for the ores.
- Prices of imported met coke has gone up considerably, which has also increased the cost of production, and this will also add up to the resistance from bidding high in the auctions.
Current Assessment:
- Ex-Jajpur, India: INR 66,000/t;
- CIF China: cents 69/lb;
- CIF Japan: cents 71/lb; and
- CIF South Korea: cents 70/lb
Outlook:
Ferro chrome prices are expected to be range-bound in the coming weeks. Meanwhile, increased container issues and higher freight costs might increase the interest in the domestic market.
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