The Odisha Mining Corporation (OMC) intends to sell 24,300t of chrome ore from South Kaliapani and Sukrangi Mines on 06th Oct’ 20. This auction is one of the most awaited events for the ferro chrome producers without captive mines as they are almost out of chrome ore.
The base price has been increased by a whopping 45% from May’ 20 in line with the absence of auctions leading to higher ferro chrome prices and higher operational cost due to monsoons and labour availability concerns. The quantity offered is comparatively very low, mostly 44-48% Cr2O3 has been put for auctions, while quantity allocation for higher-grade ore is marginal.
Why the shortage of Chrome ore in India?
Since the past few months, chrome ore mines have been going through a lot of instability, which has been affecting the production levels. Three major chrome ore mines were auctioned and hence became non-operational. Meanwhile, OMC didn’t auction ores post May, which intensified the scarcity of ores for the alloy producers who were dependent on the merchant miners.
How can the increase in base price impact the market?
Currently, the demand from the ferro chrome export market is tepid, which is not a positive sign for the ferro chrome market. There is an expectation in the market that the OMC auctions would fetch about 50pc premium on the set base price. However, with the subsequent increase in chrome ore prices, the producers of ferro chrome will likely be in a difficult situation, on an expected sharp increase in the production cost of ferro chrome.
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