India: Ferro chrome prices continue falling on subdued demand; market awaits auctions' results

Indian domestic ferro chrome (HC 60%) prices continued the downward trend this week. Market participants were hesitant to make major bookings as they awaited Ferro Alloy Corporation Ltd.'s (FACOR's) and Odisha Mining Corporation's (OMC's) auctions.

According to SteelMint's assessment on 20 July, Indian ferro chrome prices stood at INR 98,000/t exw-Jajpur, down by INR 2,800/t w-o-w. Majority of the deals were closed in the range of INR 97,000-99,000/t. In addition, Vedanta-FACOR's auction held on 19 July was concluded at INR 97,400/t, almost close to the base price of INR 97,200/t.

Some deals for small quantities were also concluded in the market at INR 100,000/t exw, sources informed.

Factors impacting domestic ferro chrome prices-

• Buyers await price clarity: Ferro chrome prices experienced a decline due to limited trading as market participants were awaiting auction outcomes. Buyers expected lower prices at FACOR's auction, while sellers held back sales to assess the impact of OMC's chrome ore auction. Consequently, trading activities slowed down as participants were seeking clarity on the future price trends.
  
  
• Declining stainless steel prices: Prices for 304- and 316-grade stainless steel fell by INR 2,000/t and 4,000/t respectively, as assessed by SteelMint on 18 July. Due to an intense competition from lower-cost imports and weak demand, particularly for 300 series, the domestic stainless steel industry experienced difficulties. Numerous major producers were obliged to reduce their prices as a result of ongoing downward pricing pressure, which, in turn, pressured ferro chrome prices.
  
  
• China's influence: Due to the continued decline in stainless steel prices in China, there was less demand for ferro chrome.
  
  
• Fall in chrome ore prices: Chrome ore contributes somewhere around 42-46% in the total cost of ferro chrome manufacturing, As prices of UG2 chrome ore decreased, ferro chrome prices followed the trend.
  
  

Outlook

OMC's auction, the main factor influencing domestic pricing, will define the market's course in the next week. The miner has scheduled an auction for 73,700 t of chrome ore of various grades (40-54%) and sizes from its South Kaliapani and Sukrangi mines on 20 Jul'23. As compared to the previous auction held on 16 Jun'23, base price is lower by 9%.