Indian ferro chrome prices rose by INR 1,200/t w-o-w due to high production costs resulting from surging prices of chrome ore worldwide despite low demand.
According to SteelMint’s assessment on 20 April, 2022, producers are currently offering at around INR 121,000-122,000/t exw-Jajpur. However, a few producers tried to push up the offers but could not crack any deals at higher levels.
Highlights:
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- Hike in chrome ore prices: A strong trend has been observed in the chrome ore market recently. Due to the high sea freights and the floods in South Africa (the largest chrome ore producer), port shipments are being impacted in the international chrome ore market and also prices. Thus, high production costs are leading smelters to raise their offers.
- Coke and coal prices rally: The prevailing coal shortage in the domestic market has put producers in a tight spot. They require around 4,000 units of electricity and 600 kg of coke to produce 1 tonne of ferro chrome.
Domestic miner Coal India Ltd (CIL) is currently curtailing coal offering for auction sales to meet elevated demand from the power sector. As a result, buyers are seen rushing to procure coal at higher bid prices.
Supply tightness in the wake of the Russia-Ukraine conflict has led to a surge in global coal prices, thus making imports unviable for power generation. The Indonesia 4200 GAR coal was assessed at $88/t on FoB basis, down from $100/t in the month-ago period. But, the prices are still up by nearly 86% since the beginning of CY22.
There has not been much comfort with regard to coke prices either. Prices of met coke in the domestic market are steadily increasing in line with rising prices of Australian coking coal. On the other hand, prices of Japan-origin coke (64% CSR) have gone up by $39/t w-o-w to $689/t on CFR India basis. So, overall, this has resulted in an increase in ferro chrome prices amid high production costs. - Meanwhile, less production is also supporting ferro chrome prices, as some ferro chrome producers have switched to manganese alloys production.
- In addition, IDCOL’s auction received aggressive bidding on 19 April. The auction ended with prices 8-10% higher than floor prices. This also led other producers to raise their offers.
- SteelMint, however, recorded around 4,000 t of deals in spite of the weak domestic demand because buyers were bargaining hard and booking as much material as possible so that their operations are not disrupted.
- Meanwhile, slow export inquiries also restrained producers from implementing further hikes.
- Additionally, stagnant price and low demand for stainless steel due to the off-season are deterring buyers from booking at higher levels.
Outlook
Indian ferro chrome producers are not willing to reduce their offers, based on two factors. One, the supply shortage and two, the high cost of production, despite low demand, sources informed.
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