India: Ferrochrome producers holding on to offers in expectation of a price hike

Indian ferrochrome prices are driven by short supplies and increased chrome ore prices in the domestic market. Producers are mostly willing to hold back offers as they foresee an increase in prices after the Chinese market reopens. Currently, producers are comfortably making deals at INR 97,000-98,000/t Ex-works. However, as the financial year is about to end, many producers who are facing liquidity crisis are willing to short sell.

Producers and merchant exporters are certain that Chinese prices will increase after the New Year holidays. The main reason behind it is the increased electricity restrictions in Inner Mongolia which will affect the production of ferrochrome. Indian ferrochrome smelters were able to conclude deals at cents 105/lb CNF China, before the holidays and they expect that the prices will go higher.

The recent Vedanta (FACOR)’s ferrochrome auction boosted the sentiment as the entire quantity was booked and around 4% higher than the base price. For 10-50 mm size, bids were received in the range of INR 96,300-97,900/t, which was brought by a trader.

The sentiment got a further boost with the increase in stainless steel scrap prices, which will promote the mills to use more ferrochrome. Moreover, Nickel prices also increased to a six-year high in London Metal Exchange amidst better demand predictions from Battery market in 2021. This might also put the stainless steel manufacturers under pressure to increase prices.

In the meantime, producers are worried about the chrome ore prices in the domestic market, which increased by around 43% since last month. Producers are refraining from lifting ores before the Chinese market reopens, as then they want to get a clear picture of ferrochrome pricing trends. Meanwhile, only a few producers who are short on chrome ore inventory and have to cater to the orders will procure ores at such higher prices.

Outlook:
Ferrochrome market will be on a wait-and-watch mode till next week and unless there is some major news in the domestic market, sellers and buyers both would wish to remain calm.