India: Ferro chrome prices drop on dull domestic demand

After hitting an all-time high in mid-June'21, Indian ferro chrome prices have been falling for a couple of weeks due to the bearish domestic market. SteelMint assessed current prices for HC-60% grade at INR 108,000/tonne (t) exw-Jajpur, a drop of INR 5,000/t w-o-w. Meanwhile some deals were recorded at lower prices as well.

Domestic buyers negotiate at lower prices
Domestic stainless-steel mills are aggressively negotiating at lower prices. Meanwhile, in absence of Chinese demand, the domestic ferrochrome smelters have no outlet for sales. Hence, they are compelled to sell at lower prices in the domestic market itself. According to SteelMint sources, only major ferro chrome producers have successfully dominated the domestic market. In this week, around 4200 t deals were concluded at the range of INR 105,000-108,000/t exw.

China faces production cuts amidst carbon neutrality pledge
Inner Mongolia, the heartland of ferro chrome production in China, is facing severe production cuts as the government has launched a carbon-cutting plan by 2060. According to the sources, a few ferro chrome plants are undertaking shut downs China: Power cuts hit ferro chrome production in several provinces while some others are struggling with production curtailment due to power utilisation norms issued by the local government which further resulted in the tight supply of ferro chrome in the Chinese market, leading to price rise. Some sellers are waiting for a further hike in prices of ferro chrome. However, at present, the market is in favour of buyers hence, the producers are compelled to reduce their offers.

Stainless steel production remains affected
Stainless steel makers producing the 300 series through EAF- or IF-routes are also ordered to slash production to reduce emissions coming from energy-intensive industries China: Leading stainless steel mill slapped with &'production cut&' order Consequently, ferro chrome prices came under pressure when the major stainless steel producers reduced ferro chrome purchase tenders earlier this month. Producers and traders in China are accepting ferro chrome offers at around?115 / lb CNF, China from the international market.

UG2 prices drop
South African miners have reduced the UG2 chrome ore prices by $10/t w-o-w to $175/t CNF China, owing to dull demand from Chinese ferro chrome smelters. Restriction in electricity usage has limited the supply of chrome ore.

Outlook
The ferro chrome market is very cautious amidst balanced supply-demand dynamics and production cuts at ferro chrome as well as stainless steel plants in China. Meanwhile, China is not willing to import the material, furthermore forcing the producers to reduce their prices.