India: Ferro Chrome Market Remains Depressed in line with Tepid Demand

Indian Ferro Chrome prices are at bottom levels, and the producers are selling below the cost line to generate the cash flow. A Ferro Chrome producer shared that any prices below INR 64,000/MT is not viable for the manufacturers as it will not cover the fixed cost; and considering the increased Chrome ore prices, the situation is much worse. However, shutting down is not an option as the restarting cost would be much higher and therefore, the production needs to be continued, he added. Manufacturers were under an impression that the alloy prices may increase but now there is no hope for the prices to redeem anytime soon. Therefore, stocking is not an option anymore and as it is month-end the producers are aggressively selling even after incurring losses to generate some cash flow, as most of them are going through an intense liquidity crunch. Producers are holding much pessimistic attitude towards the market and feel that the prices may fall further down

At present, the domestic price for Ferro Chrome in India is assessed at around INR 62,000/MT Ex-Jajpur. However, a few deals are happening below the stipulated levels in the market. Meanwhile, many producers are not willing to lower their prices below INR63,000/MT. Hence, the domestic market remains scattered in terms of prices and the down-trending market situation is deserting the buying tendency of the Stainless steel manufacturers. Offers for CNF South Korea (10-50 mm, HC 60%) is at around 72 cents/lb, CNF Japan (10-50 mm, HC 60%) is at 73 cents/lb and for China, the prices are at around 68 cents/lb CNF. The export market remains dull with the down-trending stainless steel market.

Chinese Market:
The Ferro Chrome demand is shrinking and the producers are holding sufficient inventories. However, the production in November remained at 548,000MT, which is 18,300MT higher than Oct'19. The increase in production was mainly due to reduced power cuts in Inner Mongolia, which is the major producing area of Ferro Chrome. Meanwhile, many parts of the country experienced production cuts and shutdowns due to environmental restrictions. Yesterday, CITIC Pacific announced its purchase price of HC Ferro Chrome at 6300-6400 Yuan / 50 basis tons (acceptance including tax package), which was the first reduction of 450 Yuan / 50 basis tons compared with the previous month. The mainstream steel mills have not yet released their prices. The Ferro Chrome market is mostly waiting for the new round of purchase prices by the Southern Steel companies.

On the future outlook, the panic situation in the market would continue to intensify as the Stainless steel market is continuing to be down trending. The demand for Ferro Chrome likely to be weakened in December due to off-season in the global market and the Ferro Chrome inventory will get consumed in the time being. Therefore, it is anticipated that the market may warm up not before the first quarter of the New Year.