Indian ferrochrome producers are not being able to decide at what rate to offer as the recently concluded OMC chrome ore auction received a very poor response and the Chinese buyers are out of the market on account of New Year holidays.
There is a supply shortage in the market, with only a handful of producers having sufficient stock, and for bulk deals, producers are quoting higher. Meanwhile, deals have been concluded this week at up to INR 97,000/t Ex-works Odisha.
However, as soon as OMC declared their base price of chrome ore on 09-Feb evening, producers retracted their offers. In the meantime, the most awaited chrome ore auction received very poor response due to an exceptional hike of 82% in the base price, as only 7% material fetched bids. Thus, there is an expectation that OMC might revise the prices and re-auction the unsold quantities. Till the uncertainty is not mitigated, the producers are likely to pull back their offers.
Meanwhile, few traders who are facing liquidity issues are ready to negotiate and sell at INR 94,000-95,000/t. However, most of the buyers are awaiting a clearer direction and resisting to buy before the Chinese market reopens after the New-Year holidays.
Outlook:
In China, ferrochrome prices settled at RMB 8,400/t before the holidays and the buying tendency remained subdued in the past week due to approaching holidays. Meanwhile, with the stricter environment and electricity policies in Inner Mongolia (the largest ferrochrome producing region of China) the prices of the alloy is likely to increase as the market reopens.
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