India: Ferro chrome prices reach near-production costs amid weak demand

In the face of weak demand and high selling pressure, Indian ferro chrome prices fell by INR 2,250 /tonne (t) w-o-w and have reached near production costs.

According to SteelMint’s assessment on 14 July, producers offered at around INR 103,000-104,000/t exw-Jajpur.

Factors behind fall in ferro chrome prices

• Weak domestic demand: Domestic ferro chrome demand this week was weak, as buyers were booking lesser material than their usual monthly consumption due to the reduction in stainless steel production. As a result of the monsoon and an increase in export duty, stainless-steel production has been cut by 25-30%. This led to weak domestic demand for ferro chrome.
  SteelMint, however, has recorded around 10,000t of deals despite weak demand. Among them, around 6,000t were booked by major producer at around INR 103,200/t exw-Jajpur.
• Stainless-steel prices remain under pressure: Stainless steel prices are still under pressure. Meanwhile, stainless steel (304 grade, HRC) prices were assessed on 12 July at INR 234,000/t ex-Mumbai, down by INR 1,000/t w-o-w. This also resulted in a decrease in ferro chrome prices amid slow purchases.
• High selling pressure: The seaborne demand, mainly from China, for Indian ferro chrome is also muted. Only long-term contracts have been catered to by the smelters. There were even some buyers who requested a reduction in quantity. As a result, prices were lowered due to high selling pressure.

China market overview:
China’s ferro chrome prices remained stable w-o-w at RMB 9,350/t ($1,383/t) exw-Inner Mongolia amid weak demand due to production cuts owing to high temperatures. The overall market was weak due to low trade volumes, with most buyers in a wait-and-watch mode. Moreover, lower counter bids from buyers contributed to the weak trend in the ferro chrome market.

Outlook
An expected weak stainless steel market in the rainy season will continue to exert pressure on ferro chrome prices. However, with prices levels nudging production costs, there is limited scope for any major decline from here.