India: Ferro chrome prices climb to 8-month high

Indian ferro chrome producers have increased their offers yet again this week. Although there is strong demand in the market, the majority of buyers are waiting for FACOR's ferro chrome auction on 2 February, 2023 to get a clear picture.

In addition, sentiments remain supported after the Chinese stainless steel mills' tenders declared hike in purchase prices for February.

According to SteelMint's assessment on 2 February, producers' offers were hovering at INR 116,000-117,000/t exw-Jajpur, with limited bookings being recorded in the domestic market this week.

However, producers were holding back their offers in anticipation of a significant price hike in the near future. Meanwhile, major producers are more focused on the overseas markets due to good realisations amid rising prices of ferro chrome in China.

Prices have touched eight-month high, according to SteelMint data.

Factors supporting prices:

• Hike in Chinese stainless steel purchase tender prices: As stainless steel producers returned after the holidays, the operating rate increased resulting in a steady release of demand. A major mill has increased its ferro chrome purchase prices by RMB 450/t (USD 67/t). This encouraged Indian smelters to expand their offerings in the domestic market.
  
  
• South Africa's electricity charges to rise from April: Indian ferro chrome prices also get a boost as South Africa's energy regulator approved an 18.65% power increase in prices for the beleaguered state utility Eskom for the fiscal year beginning 1 April 2023, citing higher fuel costs, depreciation of generation assets and increased procurement from independent power producers. Furthermore, logistical issues also played a part in driving up charges.
  
  
• Chrome ore prices strong: The Chinese chrome ore market reflected a positive trend with favourable trading atmosphere. Chrome ore prices rose due to a gradual increase in raw material purchasing sentiment on the demand side following the holiday, as well as the impact of the new round of steel recruitment, which has resulted in a bullish sentiment among market participants and an uptick in external quotations.According to SteelMint assessment on 13 January, UG2 chrome ore was being offered at $270/dmt, while Turkish chrome ore offers were at USD 355/dmt on CNF China basis.
  
  

Outlook
Indian ferro chrome market is expected to remain bullish in near terms. Today's FACOR's ferro chrome auction, according to sources has garnered a good response and this will likely to impact domestic prices as a benchmark has been set.

Meanwhile, the rise in nickel prices is influencing producers to keep their offers at higher levels, sources informed.

In addition, the Chinese government is planning to stimulate the economy through monetary and financial assistance, as well as infrastructure investment. This is also giving a green shoot of hope that good demand will land in the Indian market.