The Indian ferro chrome market has witnessed a significant growth in the past few weeks amidst ongoing supply shrinkage. There are only a handful of producers who are, at present, catering to the domestic market, while majority of the other producers do not have enough volume to offer in the spot market.
Producers with ready stocks available for dispatches are quoting higher prices of up to INR 106,000/tonne (t), while most deals are concluded at around INR 105,000/t ex-Jajpur. Last week, the Vedanta auctions fetched aggressive bidding at INR 104,500/t, driving up the domestic spot market.
Smelters are less interested in offering to the exports market due to discrepancies in bids and offers. Few smelters are offering at around 105 cents/lb for CIF China, but Chinese buyers are showing reluctance to purchase at such higher prices and are bidding for 103 cents/lb. Thus, the smelters are more keen to offer in the domestic market due to higher profit margins.
Ferro chrome prices in China have increased significantly in the spot market after Tsingshan released its tender prices for the month. The spot prices increased by around RMB 300/t since the start of the week. However, this had little impact on the number of export inquiries for India.
Import volumes for the material from China increased as domestic production in the country suffered. The growth rate in the stainless-steel market is strong and this bullish trend is expected to continue in the next quarter of 2021. Thus, Indian smelters expect demand to pick up soon.
Chrome ore prices in the Chinese spot market continued to increase despite production curtailment in Inner Mongolia. Increasing ferro chrome prices are encouraging buyers from other parts of China to book chrome ore (raw material of ferro chrome) even at higher prices.
Meanwhile, the freight costs are also rising, supporting spot chrome ore prices. Chrome ore prices from Turkey increased by $5/t to $275/t for 46-48% CNF China, amidst increased demand for higher-grade ores. Meanwhile, it is expected that UG2 prices should soon see an increase in line with increasing spot prices.
There is a good demand for ferro chrome from the European countries, but Indian smelters are more interested in catering to the domestic and Chinese markets, the latter being the largest importer of Indian ferro chrome. In addition to the higher domestic prices, increasing shortage of containers is also discouraging domestic producers from concluding deals in the European market, which in turn, is further pushing up prices in European nations.
Outlook
Although, prices remain on the higher side and supply crisis is less likely to subside in the short term, there is increased uncertainty in the market regarding stability in ferro chrome prices.
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