India: ferro chrome market strengthens after FACOR's auction result

India's ferro chrome prices were up by INR 2,700/t exw w-o-w amid good demand from export and domestic markets. Meanwhile, Vedanta's ferro chrome auction concluded on 10 October at 5% premium from the base prices. As a result, ferro chrome prices are also supported by the positive response to Vedanta's auction.

According to SteelMint's assessment on 13 October, producers were offering at around INR 99,000-100,000/t exw-Jajpur depending upon the availability of stocks. And around 4,500 t was booked in the domestic market at these levels.

Factors supporting ferro chrome prices

• Domestic demand improves: Ferro chrome demand in the domestic market improved after the good response received in FACOR's ferro chrome auction. Buyers started floating their inquiries and booking material aggressively in an anticipation of further hike in prices. As a result, ferro chrome prices rose.
  
  
• Good export demand: Export demand has also picked up mainly from China. The ferro chrome market is receiving inquiries from exporters. Chinese buyers stepped up their purchasing after Golden Week holidays. Producers started offering to China at around 95 cents/lb, CIF China, up by 4% w-o-w, as assessed on 13 October. However, some producers still held their offers for overseas buyers in an expectation of further increases. This also led to the hike in domestic ferro chrome prices.
  
  
• Stainless steel prices remain stable: Due to insufficient supply from overseas sources and reduced stock in domestic warehouses, stainless steel prices remained stable w-o-w. Lower Chinese arrivals and the closure of POSCO were cited as major impediments to outside supply. Meanwhile, as of 11 October, Indian stainless steel (304 grade, HRC) prices were at INR 245,000/t exw-Mumbai.
  
  

Outlook
India's smelters are optimistic because they are receiving numerous inquiries. Smelters are also anticipating strong demand from China following its largest political event, which begins on October 16. Market participants anticipate significant reforms following Chairman Xi Jinping's extension of his term in power for another five years. Given this, the grey market for stainless steel is under the impression that there will be a large demand for stainless steel as a result of the reform. As a consequence, ferro chrome is expected to be in high demand in the near future.