Indian ferro chrome prices increased to INR 104,000/tonne (t) amidst supply shortage in the domestic market. There is only a limited number of producers catering to the domestic market, which is actually resulting in a supply tightness and thus the uptrend in prices. Although most of the deals were concluded at around INR 104,000/t this week, offers have increased up to INR 106,000/t.
Chinese ferro chrome supply declines in June
Major Chinese ferro chrome suppliers located in Inner Mongolia stopped offering in the spot market and are only doing so to cater to the long-term linkages. Thus, prices in the spot market increased to significantly high levels. Inner Mongolia prices touched RMB 8,100/t, an increase of RMB 100/t d-o-d.
Meanwhile, other regions reported an increase of around RMB 150/t d-o-d after the news came into the market.
In Jun’21, output volumes fell by 38,200 t m-o-m, amidst energy consumption restrictions, and power supply issues. Production mainly fell in the Sichuan, Inner Mongolia, and Guizhou regions but remained stable in Hunan and increased in Shanxi, Guangxi and north-western provinces.
Chinese index prices may increase
Amidst tepid buying in the Chinese domestic market, it was expected that the index prices might settle at lower levels. However, due to power restrictions and increased production costs in Inner Mongolia, many major ferro chrome smelters increased their prices in the spot market and later stopped offering owing to supply constraints. This increased the prices in the domestic market by RMB 550/t since the start of the month. A plant of the Valin Group increased the tender prices by RMB 750/t for July procurement of HC ferro chrome.
Domestic chrome ore prices up 18% m-o-m
Odisha Mining Company (OMC) increased its chrome ore prices by 18% m-o-m in the auctions held on 25 Jun’21. Many smaller smelters, who were solely dependent on OMC, reduced or shut down due to increased ore prices. The situation is not expected to ease with a further hike in the prices of ore, according to the smelters.
Meanwhile, due to increased supply shrinkage in the market, domestic prices shot up to INR 104,000/t ex-Jajpur.
Supply shortage behind price hike
Supply shortage in the domestic market has supported the increase in ferro chrome prices. Demand from the spot market in China is still lagging, while major domestic smelters are more inclined towards domestic deals due to higher prices.
The long-term exports contracts, however, remain unaffected. Currently, most of the supplies are restricted to a handful of producers, which is narrowing the scope for negotiations for the buyer. Thus, they are accepting the higher offers.
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