India: Ferro chrome market bearish ahead of Chinese tender announcements

In India, ferro chrome prices are on the decline due to limited demand from Chinese steel mills. Chinese demand has set prices since the beginning of the year. This slowdown is putting pressure on sellers.

Many Chinese traders await the ferro chrome tender price announcements for December from the major stainless steel mills. Meanwhile, Indian buyers are also delaying their procurement as they expect further price falls. It is expected that Chinese mills will reduce their tender prices to match the spot market prices of RMB 9,550/t ($1,494/t).

This week, the Indian prices fell by INR 2,225/t w-o-w to INR 115,725/t ex-Jajpur. However, sellers remain affirmative that prices might rebound as Chinese pollution norms get stricter, before the winter Olympics. China might see a severe production curb in various parts of the country, which will boost the import sentiments for the Chinese stainless steel mills. Meanwhile, as the country gets into winter, the steel mills are expected to refill their inventories. Indian sellers suggest that the seasonal uptrend in the prices will be seen from next month onwards.

Production in China
There is still some lack of clarity regarding the energy curbs and how these would be followed up in the coming month. Major steel mills remain affirmative that prices will be controlled and may not inflate as much as earlier. Although some furnaces in Southern China have stopped their operations due to rising electricity costs and falling alloy prices. Inner Mongolia, the largest ferro chrome producing region, is operating at full phase and there has been a significant reduction in the operating cost as well.

Exports from India
Indian exporters shared with SteelMint that, Chinese buyers are bidding for much lower prices. Current spot market prices are at around cents 119/lb ex-Inner Mongolia. Thus, the importers are not willing to pay more than cents 118/lb ex-Inner Mongolia. However, most of the Indian smelters are reluctant on offering such lower prices and are bidding for cents 119/lb to cents 122/lb CNF China, which is in line with the domestic ferro chrome prices in China.

Outlook
The short-term outlook for ferro chrome prices looks bleak as demand from China is expected to remain subdued on improved Chinese ferro chrome production. However, the market is expected to pick up soon, when winter arrives in China.