As we approach the end of the financial year, Indian ferrochrome prices have fallen after a period of sustained uptick. There is increased selling pressure on the suppliers now, as buyers in the domestic market have been inactive and are waiting for the upcoming Chinese tender prices.
“There are no buyers in the market, as most of them have enough inventory and the export market is also muted. This has put pressure on the ferrochrome industry to reduce prices and some are desperate to sell as most market participants expect Chinese tender prices to correct”, shared a ferrochrome producer.
Meanwhile, few producers remarked that the fall in prices is led by few sellers that are desperately trying to liquidate their stock before the financial year-end.
The ferrochrome market is now silent with very limited buying in both domestic and exports, as most buyers expect a fall but are unsure of the extent to which prices will fall. They are waiting for the announcement of next month’s Chinese tender prices for more clarity. Thus, the producers remain concerned about the extent to which the prices might fall and are quoting at around INR 98,000/t while few deals were heard to be concluded at marginally lower levels too.
The price of chrome ore, the major raw material for ferrochrome production, is at much higher levels and the production cost is expected to surpass the INR 90,000/t mark. Currently, chrome ore prices are at the highest in 4 years in the Indian market, which is substantially pushing up the fixed cost for ferrochrome smelters.
“The production cost will reach up to INR 95,000/t for some smelters with no captive ore and power. However, if the production cost doesn’t come down, producers might have to again go back to running at a loss”, revealed a ferrochrome producer.
Indian stainless-steel mills are worried about the removal of anti-dumping duty and therefore are forced to reduce the price of stainless steel. Meanwhile, Chinese stainless-steel mills are more focused on the local market and are not willing to import at high prices. Prices in the spot market in China are at 8,300 yuan/t for grade Cr 55% and the import prices from India are at around 104 cents/lb for grade 60% Cr (equivalent to 8,960 yuan/t). However, Nickel prices have increased marginally over the last three days (LME Nickel: $16,526/t), which might provide some support to the stainless-steel prices.
Outlook:
There is an increased expectation that the prices will fall and therefore the buyers are holding a wait-and-watch approach.
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