Indian Ferro Chrome market has come under pressure given limited buying appetite for Ferro Chrome in China and the underlying weakness in the stainless steel market.
Chinese traders are pulling back from taking a position, expecting the major stainless steel firms to substantially lower their purchase price for May deliveries. As a result, there is a lot of uncertainty on what price should they buy now.
A producer source mentioned that China has sufficient amount of Ferro Chrome after a continuous spell of increasing domestic Ferro Chrome production. Moreover, the Ferro Chrome market is persistently under pressure from falling Stainless Steel and Chrome Ore prices in China.
SteelMint assessed Ferro Chrome offers at 80 cents/lb CIF China, while counter-offers are way lower and buyers are showing reluctance on the aforementioned price. Following the Chinese market closely, Japan and South Korea also set their counter-offers at 87 cents/lb and 86 cents/lb respectively.
A weak stainless-steel market in China has been detrimental for the Ferro Chrome producers as they have been witnessing little or no demand for the commodity from China of late. Thus, there is added dependence on domestic sales.
May tender price from major Chinese stainless steel mills are likely to be announced this week and almost everyone in the market accepts that the prices will be lower by Yuan 300-500/MT.
Considering the high Chrome Ore inventory at Chinese ports and negative views in the Ferro Chrome market, UG2 Chrome Ore prices could also come under pressure. There are talks of negotiations between the Chinese importers and South African sellers to bring down prices to around USD 190/MT CIF China.
Market sentiment in India remained bearish, with most agreeing that there could a further dip in prices in the near-term. “Market is dull as participants in the domestic market too are in a wait-and-watch mode,” said a source referring to the cautious stance taken by the buyers.
The mainstream price of HC Ferro Chrome 60% min. is around INR 71,000/MT (Ex-Works Odisha). However, buyers are negotiating aggressively and showing buying interest at below INR 70,000/MT.
SteelMint learned that the manufacturers of Ferro Chrome are weighed down by deteriorating external demand and destocking pressures, with most seeing little chance of an upswing in prices. Whereas, some agreed that there could a further dip in prices in the near-term.
On the future outlook, most market participants hold a pessimistic outlook towards the future market trend as Ferro Chrome prices are expected to slip downwards in line with major Chinese stainless steel mills reducing their tender price for May.
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