Indian ferrochrome market has witnessed continuous growth since the new year. This bullish sentiment was further accentuated by the increasing Chinese domestic prices. Since the past week, ferrochrome prices had exponential growth and are currently hovering at around INR 96,000/t. However, last deals were concluded at the rate of INR 95,000/t Ex-Jajpur. The rise in the prices was due to a confluence of factors:
- Chinese prices increased due to higher production cost owing to the rising electricity tariffs. The electricity tariffs increase is seasonal and increases every winter. However, this time it was clubbed with electricity cuts, which resulted in lower production in China.
- Meanwhile, due to strict environmental policies, many small furnaces were forced shut in Ulanqab region of Inner Mongolia, which is the largest ferrochrome production hub of China. This also boosted the prices, as supply got constricted.
- Meanwhile, in India, the Stainless-steel prices improved, which provided the buyers of ferrochrome a margin to buy chrome alloys at higher prices.
- However, in India, the supply in the domestic market is limited, as a few major producers of ferrochrome are shut due to financial liabilities. The other major producers are only catering to the long-term export orders and many smaller producers are doing the conversion for TSML. As a result, there is only one producer who can cater to the bulk orders in the domestic market.
- In the meantime, export market looks promising as the Chinese demand increased amidst pre-stocking of ferrochrome before the Chinese New Year holidays. Chinese buyers are ready to buy at a premium price of cents 95-96/lb CNF China if the shipments can be done within the next day of booking.
Outlook:
Most of the producers of stainless steel are in a wait–and–watch mode as the prices are currently very high and the market is volatile. There is no clarity on how the market will head post-Chinese New Year.
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