Indian ferrochrome prices fell this week as buyers retreated in anticipation of a further price fall. Meanwhile, spot demand from China is non-existent, as the buyers there are not interested in importing ferrochrome, with ample ferrochrome availability at reasonable levels. The prices for ferrochrome have been tumbling since the start of the month and it has now turned into a buyers’ market.
Indian ferrochrome smelters are facing severe selling pressure and are also having to deal with production cost, which for a plant without captive chrome ore mines and power is around INR 92,000/t. Although this figure varies on a plant-to-plant basis.
Currently, ferrochrome grade 60% Cr is assessed at INR 90,000/t Ex-Jajpur, while few deals were concluded at slightly lower levels as well. However, the lower prices were due to the mix of producers’ liquidity crisis and the huge order quantity from the buyer. Meanwhile, one of the largest traders for ferroalloys reported to SteelMint that there is no buying from China even at 95cents/lb. However, producers from Jajpur showed reluctance in lowering the prices further.
Key Highlights of the week
- Stainless steel market remains bearish
Since the start of the financial year in India, Indian stainless-steel producers have been wary of stainless-steel imports from China. As the import duties are waived off, Indian stainless-steel producers are forced to lower their prices, which is restricting them in procuring high-priced raw materials. In China, prices for 304-grade Stainless steel CRC took a plunge on lower raw material cost and weak demand from the market, thus the buying interest is expected to shrink further from the stainless-steel mills in the month. - Nickel prices crashed in LME
Nickel prices in London Metal Exchange (LME) crashed by around $500/t on Monday and further went down on Tuesday. The prices fell after Chinese Premier Li Keqiang stressed on the necessity to strengthen control of commodity pricing. Meanwhile, as per the local news sources from China, Chinese vice-premier Han Zheng commented at the country’s Financial Stability Committee last week that higher commodity prices need close attention. This growing concern was over the inflation rates which was around 4% and it brought to the attention of top Chinese policymakers. However, this had a negative impact on the prices of Nickel. Currently, Nickel prices are at $16,173/t (LME). - Uncertainty regarding lockdown amidst smelters
According to a major ferrochrome producer, there is growing uncertainty in the market regarding lockdown in the country, which is creating panic amongst the smelters. Producers are wary of the situation and are constantly worried about how the situation would turn out, as there could again be mining issues and labour shortages affecting dispatches of finished goods as well. - International chrome ore prices drop
International chrome ore prices took a plunge after the ferrochrome prices fell in the Chinese market. The South African chrome ore price is down by around $25/t since the start of the month. There is a growing concern among the miners about the further fall in prices amidst the down-trending ferrochrome prices in China. Although the production cost would be much lower now, the buyers are in a wait-and-watch mode as they anticipate a further fall in prices. As the prices of South African chrome ore falls, there is an increased pressure on the other origins to lower prices. Currently, the UG2 prices are at $155/t CIF China. - Chinese ferrochrome prices tumble
Although the production of ferrochrome decreased in Inner Mongolia, the southern provinces have made up for the loss in the production. Therefore, with high production and lower demand the Chinese ferrochrome industry is down trending and there is huge deviation in the prices of ferrochrome from different regions. After the tender prices for Apr ’21 was settled, the prices in the spot market continued to be on a downtrend. Currently, the prices for HC ferrochrome 55% is RMB 8,000/t ($1,225/t) in Inner Mongolia, down by RMB 300/t from the start of the month. - Indian producers await OMC auction
Indian ferrochrome producers who are dependent on OMC auctions are eagerly waiting for the next round of chrome ore auctions by OMC. At the current prices of chrome ore, many producers stated that their production cost is higher than the selling price. Meanwhile, it is expected that the state-miner might lower down the prices of chrome ore substantially considering the current market prices of ferrochrome and the downstream tendency of the market in the upcoming weeks.
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