OMC chrome ore auctions concluded today, and chrome ore prices went down by approximately 10% m-o-m. The auction didn’t receive aggressive bidding as expected. Key findings from the auction are stated below:
- Almost all the quantity was booked close to the base price as the buyers are concerned about the down-trending ferro chrome market amid continuous losses
- The ferro chrome producers are also troubled with surging imported met coke prices, which has discouraged them from bidding higher in the auction.
- Many producers are not producing at full capacity and are only catering to the previous orders, which has resulted in less demand for chrome ore.
- Supply of chrome ore has increased as 40,000t of chrome ore is being offered by TSML in Dec ’20. Thus, buyers have shown less interest in bidding high.
- Meanwhile, many producers who used to participate in the auctions are now trying hard to get into conversion contracts with TSML, as they feel that it would provide them with better security in terms of fixed earnings.
Outlook:
This reduction in chrome ore prices will bring down the ferro chrome production cost by approximately INR 6,000/t, which might be a big relief for the ferro chrome smelters. However, the prices of ferro chrome is expected to remain stable in the near-term.
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