Ferro silicon scarcity may lead to unexpected price levels in India

The ferro silicon market of India might witness a overwhelming demand-pull inflation of prices from Guwahati anytime soon. The largest supplier of ferro silicon, 'Bhutan' has imposed its first nationwide lockdown due to spread of coronavirus. The lockdown is expected to extend from Monday, which was announced earlier, as the contact tracing is in process during lockdown.

"Phuentsholing is now declared as red zone. The entire nation is in a lockdown but additional restrictions and surveillance will be enforced in the district starting today," Bhutan PM, tweeted on Thursday. "All schools, institutions, offices and commercial establishments will remain closed," said the Bhutan government.

Phuentsholing, which is under red zone, is also one of the major supplier area for ferro silicon. A provisional measure has been announced by India, to support Bhutan in this tough time. Bhutan and India opened a new trade route on 15 Jul, which passes through the Indian town of Jaigaon in West Bengal and leads to Alhay near Pasakha in Bhutan.

However, even with the new trade, the supply is expected to be disrupted due to long run, with the dispatches and the production both getting affected. Meanwhile, the production in the North-eastern part of India is also quite low, with only a handful of producers operating, which is giving them the benefit of supply concern.

Within a week, the prices have escalated by INR 10,500/t and is currently at INR 82,000/t. However, producers expect that the prices may reach to INR1,00,000/t due to supply shortage. In the meantime, the buyers are also aware that the situation might reverse as soon as the Bhutan market reopens, thus are postponing procurement as much as possible.