India: Ferro chrome offers improve on good export demand

Indian ferro chrome producers further hiked their offers by INR 3,600/tonne w-o-w amid good export demand. Furthermore, ferro chrome prices also supported post-active participation in Vedanta's ferro chrome auction held on 5 January, 2023.

According to SteelMint's assessment on 12 January 2023, the majority of producers began offering at around INR 107,000-108,000/t exw. Moreover, some producers offered higher prices to match the export offers but buyers have not fully accepted the offers. As a result, only a small number of transactions have been recorded this week in the domestic market.

Factors influencing buyers to push up prices:

• Inquiries improved in the export market: This week, ferro chrome smelters received numerous inquiries, the majority of which came from China. This week, the ferro chrome market showed a strong trend, the market trading atmosphere was positive, and the actual trading volume remained stable. SteelMint recorded a transaction of around 4,500 t in the export market as sellers received good returns in the international market. This boosted the prices of ferro chrome.
  
  
• Vedanta's ferro chrome auction receives good response: Vedanta's ferro chrome auction received good response with a 5% hike on the closing price (INR 107,600/t) against the base price on 5 January. This also led to a hike in ferro chrome prices.
  
  
• Chrome ore prices hike: Chrome ore prices rose due to high demand and a lack of inventory in Chinese ports. On January 6, SteelMint recorded approximately 2.26 million tonnes of chrome ore inventory in Chinese ports. This increased chrome ore prices, and UG2 chrome ore (Conc 40-42%) is now being offered at around USD 255/dmt, CNF China, as of 10 January. Owing to the high production costs, ferro chrome prices also rose.
  
  
• INR gains against US dollar: The Indian rupee increased by 33 paise to 82.33 per dollar in early trade on Monday, supported by a weak US dollar and a firm trend in domestic equities. It also had an effect on ferro chrome prices as smelters were more focused on the export market.
  
  

Outlook
Market participants anticipated that ferro chrome prices will remain relatively stable in the near-term due to cost factors. Furthermore, Covid cases are decreasing in China's urban areas, providing hope, according to sources.

However, due to a slowdown in finished goods' export demand, India's stainless-steel demand remains somewhat affected. Stainless steel of 304 grade CRC prices remained stable at INR 244,000/t exw-Mumbai on 10 January, according to an assessment. This could cause prices to fall if domestic buyers refuse to book material at higher prices. Furthermore, if export demand remains weak and sellers rely on the domestic market in the short-term, prices may be protected from further increases.