Indian ferro chrome market is facing an acute shortage of chrome ore and thus the production of ferro chrome is severely hampered. Only a handful of producers are left with any inventory of chrome ore as OMC hasn’t held any chrome ore auctions since May’20 (except the sub-grade ores which received very modest response).
However, the private miners are now with an advantage and have sold chrome ore at around INR 4,000/t higher from last month’s prices. This has further added to the cost of production of ferro chrome by approximately INR 10,000/t.
Meanwhile, since the major ore reserves are with OMC and TATA, and if OMC doesn’t conduct auctions in Sep’ 20 as well, it will count for acute shortage of chrome ore and plant shutdowns can’t be ruled out either. Therefore, if the situation is prolonged companies like TATA Steel could stand to gain by increasing the prices, with little or no competition.
Current Assessments:
SteelMint assessed ferro chrome prices at around INR 66,000/t from Jajpur producers and further INR 1,000/t higher from the Durgapur producers. However, not much material is available at these prices also. Few deals were concluded at higher prices for bulk orders, due to scarcity of ferro chrome in the domestic market.
Meanwhile, the export market remained dull with no new inquiries, before the release of the tender prices. Major stainless-steel plants in southern China have not yet asked their suppliers for the August deliveries, and this is creating doubts in the minds of the market participants, and the popular belief is that either the tender prices will get rolled over or witness only a marginal increase.
The current assessments are as under:
Ex-Odisha: INR 66,000/t,
CNF China: cents 66/lb,
CNF Japan: cents 69/lb, and
CNF South Korea: cents 68/lb.
Outlook:
Ferro chrome prices are expected to increase sharply on acute supply shortage in the domestic market.
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