India: Ferro chrome prices down to 6-month low amid slow buying

Indian ferro chrome producers had to lower their offers yet again this week in order to close deals amid slow buying.

Price drops have reached 6-month lows, according to SteelMint data.

The market has been experiencing limited demand since mid-May.

According to the assessment on 21 July, small-scale producers and traders offered at around INR 101,000-102,000/t exw-Jajpur, while some major sellers were offering at around INR 102,000-103,000/t exw-Jajpur. Around 2,200 tonnes of deals were recorded by SteelMint this week.

However, the issue of thin margins is preventing some producers from reducing their offers, as OMC did not decrease chrome ore's base price as much as the ferro chrome market did during its auction on 18 July.

Market highlights

• Muted domestic demand: This week, domestic demand was weak. The majority of buyers were in wait-and-watch mode, anticipating further price declines. In the meantime, some major domestic buyers countered their offer at around INR 98,000/t on exw-basis, which sellers refused to accept. Additionally, some stainless-steel producers have already reserved material for the month and will inquire next month. Thus, producers were forced to lower their offers due to weak demand overall.
  
  
• Subdued Chinese demand: China's export demand shrunk as the currency depreciation has shifted its interest away from imported materials. Curtailment of Chinese stainless-steel production also narrowed the market. As a result, prices also decreased as sellers kept high inventories.
  
  
• Stainless-steel prices remain stable: Stainless-steel prices in India remained range-bound this week amid an upward correction in nickel prices on the London Metals Exchange (LME). Meanwhile, stainless steel (304 grade, HRC) prices were assessed on 19 July at INR 236,000/t ex-Mumbai, marginally up by INR 2,000/t w-o-w. Due to this, some major producers held their offers.
  
  

China market overview:
China's ferro chrome prices were significantly down by RMB 500/t ($74/t) w-o-w to RMB 8,850/t ($1,307/t) exw-Inner Mongolia amid a weak ferro chrome market as the procurement of major manufacturers has basically been completed. Market participants were more pessimistic due to low spot market transaction volumes.

Meanwhile, the stainless-steel market also showed weak transactions in line with the fall in futures prices. It will probably take some time before the economy bounces back in China after the Covid-induced stagnation.

Outlook
"According to the current scenario, the ferro chrome trade is seeing very thin margins and when these will disappear, nobody knows. If there is no export demand, prices are likely to touch break even," informed one of the major producers.