How did Indian chrome ore industry perform in H1CY'24?

• 40-52% grade leading production numbers
  
  
• OMC's production rises, Tata Steel witnesses drop y-o-y
  
  

India, home to approximately 344 million tonnes (mnt) of chrome ore reserves, mainly located in the Sukinda Valley of Odisha, experienced stability in chrome ore production in first half of calendar year 2024 (H1CY'24). The production was 2.26 mnt, a slight 2% drop from the 2.31 mnt produced in the same period in 2023.

Below are the key factors contributing to this minimal decrease:

Grade-wise production insights:

• 40-52% grade dominates production: The 40-52% grade chrome ore remained dominant in production during both H1CY'23 and H1CY'24. There was an 18% y-o-y increase in the output of this grade, reaching 1.24 mnt in H1CY'24 compared to 1.06 mnt in H1CY'23. Additionally, the production of chrome ore below 40% grade rose to 0.71 mnt in H1CY'24.
  
  

Mine-wise production analysis:

• Odisha Mining Corporation (OMC) leading India's production: OMC, India's largest chrome ore miner, accounted for approximately 42% of the India's chrome ore production in FY24. Its output saw a 31% y-o-y increase in H1CY'24, rising to 1.12 mnt from 0.85 mnt in H1CY'23. It usually conducts e-auctions every month to sell chrome ore of various grades. The average volume offered at the initial 6 months of this year was around 58,800 t. Demand from domestic ferro chrome producers, who depend on these auctions, likely contributed to the increased production, despite some fluctuations in bid prices.
  
  
• Tata Steel's output falls amid operational challenges: Tata Steel experienced a 33% y-o-y decline in production, with output dropping to 0.6 mnt in H1CY'24 from 0.9 mnt in H1CY'23. Out of its three mines, only one is running currently at 100% capacity and the remaining two are not producing good quality material and layers have also gone down. Additionally, there was a temporary halt in its mining operations, which resumed in December last year after a pause lasting few months.
  
  
• Operational gains boost FACOR's production, IMFA's output decrease: Indian Metals & Ferro Alloys Limited (IMFA) and Ferro Alloys Corporation Limited (FACOR) primarily produce chrome ore for their captive use. FACOR's production saw a 44% y-o-y increase to 0.12 mnt in H1CY'24 amid improved operational efficiencies. In contrast, IMFA's output fell by 30% y-o-y to 0.32 mnt as they usually regularise mining operations based on their requirement.
  
  

Finished market sentiments:

• Auctions, China weigh on ferro chrome market: The ferro chrome market remained largely subdued during most of H1CY'24, with prices hitting a 5-month low in May. Its market majorly remained influenced by OMC's chrome ore auction and Vedanta-FACOR's ferro chrome auction results. The export market was also not very attractive for Indian producers, as China's ferro chrome production increased, with major stainless steel producer Tsingshan maintaining steady tender prices for most of H1CY'24.
  
  
• Stainless steel production stable, demand falls: In H1CY'24, India's stainless steel market experienced reduced demand compared to the previous year. Stainless steel production remained stable, rising slightly by 2% to 1.63 mnt in H1CY'24. However, domestic demand remained sluggish, particularly in the real estate sector, leading to production cuts and challenges for Indian mills amid severe dumping from countries with free trade agreements.
  
  

Outlook

Mining operations are typically affected during the monsoon season, which may lead to a dip in output during this period. However, chrome ore output is likely to increase for the remainder of the year. Additionally, increased production from OMC will further support this growth.

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