Indian ferro chrome prices have been rising since the past few weeks, and have increased substantially in the current week. The average price of ferro chrome in Odisha’s Jajpur is at INR 130,000/t, which is 16.5% higher compared to the previous week. SteelMint has learnt that many sellers are offering material at even higher prices.
The price hike is majorly due to China’s ferro chrome production cuts, with the Chinese government following the “dual control” policy for energy conservation and energy intensity. In Sep’21, China recorded ferro chrome production lower by 0.09 million tonnes (mn t) compared to the previous month.
Major Indian exporters reported decent enquiries from China before the Golden Week holidays, but not much was translated into orders. Most market participants are waiting for the main stainless steel mills to release their tender prices for Oct after the holidays.
Before the holidays, Chinese ferro chrome prices reached RMB 11,400/t ($1,768/t), creating bullish sentiments in India on the upcoming tender release. Indian smelters are offering up to 135 cents/lb, while bids remain at 128 cents/lb from Chinese traders.
According to a smelter, “Many factors are affecting the Indian ferro chrome market, but the biggest factor is the Chinese market. The market is in a wait-and-watch mode ahead of the tender release.”
Is the market really bullish?
Although the market seems to be bullish owing to the production cuts and prolonged power issues in China, there are some downsides.
In Jul-Aug, prices were touching peak levels in the Chinese spot market. The reason being a major stainless steel mill running out of inventory, which was desperate to buy at very high prices in the domestic market. Meanwhile, most ferro chrome smelters in Inner Mongolia declared force majeure.
Thus, the Indian market witnessed a price of INR 130,000/t for the first time in history. However, as prices rose sharply, Chinese policies underwent changes and prices edged lower to RMB 9,995/t ($1,550/t) in China and INR 107,000/t in India.
The power restrictions are stricter this time, and with the onset of the winter season, the power crisis may exacerbate. The exporters remain cautious on uncertainty in policy decisions.
Major Indian producers shared their concerns with SteelMint stating that it is highly expected that the Chinese government would come up with a strategy to control the rising prices of ferro chrome, even if the power issue remains unsolved. They are also worried on lowering production by various stainless steel mills.
Many stainless steel mills in China are operating at lower rates, and some of the major mills have shut down a few furnaces due to the electricity limitation.
Outlook
Though the Indian market looks highly bullish and prices are expected to increase further in the short term, the market participants are cautious about the price bubble and are tracking the Chinese market carefully.
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