High Carbon Ferro Chrome prices fall in the domestic market owing to poor demand and a general absence of buying interest from China.
Domestic Ferro Chrome prices fall this week on lackluster demand from end-users. Currently, HC Ferro Chrome (60% grade) is being traded at around INR 69,000/MT (Ex-Works, Odisha) and INR 70,000 (Ex-Raigarh). Trading activity has been low for many months in the domestic market and so prices have remained at low-level. In the last concluded e-auction held on 13 May, 2014 Orissa Mining Corporation (OMC) increased Chrome ore prices across all grades for inside-state buyers. As prices have increased, Ferro Chrome producers may increase offers, but are cautious as they might lose out on sales as demand is very poor. Prices are under pressure on slow demand and potential increased output in China — as the upcoming rainy season in China results in lower electricity tariffs in the hydropower-dependent.
On the order of Supreme Court, the Odisha government has taken steps to close operations at 3 Chrome mines located in Sukinda Chrome valley in Jajpur district. The mines include Tata Steel’s Sukinda Chrome mines, Kamarda Chrome mines of BC Mohanty & sons Pvt Ltd. The shortage of Chrome ore has not impacted Ferro Chrome prices yet. However, this could lead to an increase in Ferro Chrome prices in the near future.
Chinese Market
Domestic spot prices of 50% Cr Chinese HC Ferro Chrome were unchanged at RMB 6,500-6,700/MT (equivalent to 80-82 cents/lb) delivered with 17% VAT, as the market continued to wait for indications from June purchase prices of Chinese stainless steelmakers. The general expectation is that major stainless producers would present a cut of RMB 50/MT this week. And, if this happens SteelMint assessed that spot prices could fall further next week.
Shanxi Taigang Stainless Steel, Baosteel and Jiuquan Iron & Steel had previously cut their May prices by RMB 50-100/MT M-o-M to RMB 6,400-6,650/MT. Domestic spot prices had eased by RMB 100/MT since early May in response to the lower purchase prices and low demand. Market participants have mostly predicted a rollover or a cut in June purchase prices. Monthly and spot prices are under pressure from slow demand and potential increases in output among producers in China, as electricity tariffs are reduced during the monsoon season. Other producers are of the view that there is limited downside to Ferro Chrome prices on support from Chrome ore prices and production costs of Ferro Chrome smelters.
The major stainless steelmakers typically set their prices in the second half of the preceding month, but have delayed doing so as they are amply stocked on the raw material.
No deals for Indian origin Ferro Chrome could be confirmed this week. SteelMint assessed that Ferro Chrome producers are waiting for some kind of trigger to push up prices as the market has been dull for a long time. Although, supported by higher Chrome ore prices the Ferro Chrome market is crippled with very weak demand.
Exchange Rate: USD 1= INR 58.88
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