India: Ferro chrome prices edge down on sluggish demand

Ferro chrome prices in India fell w-o-w amidst weak demand from domestic and export markets. The domestic buyers of ferro chrome resisted buying at higher levels. Furthermore, tepid demand from the Chinese market owing to the rise in Covid cases has also pushed down prices this week.

According to SteelMint's assessment on 23 Mar'22, ferro chrome prices are hovering at around INR 128,000-130,000/t exw-Jajpur.

Why did prices edge down?
SteelMint observed weak domestic and export demand. Major buyers have secured sufficient quantities and have ample inventory and are not in a hurry to buy, so they are booking small quantities, as seen in a ferro chrome buyer survey, while the rest are refraining from booking materials at higher levels.

Demand has been muted due to Chinese production cuts, and the recent increase in Covid cases. Demand from the European markets is good, but the higher freight cost is dragging down demand. This has forced Indian smelters to reduce their prices.

In addition, a lot of buyers were waiting for Vedanta's ferro chrome auction, conducted today, to get an accurate picture of the market. This kept domestic demand muted as well.
However, IDCOL failed to receive bids at higher base prices and rescheduled its auction to 25 Mar'22. Overall, buyers are striving to get the material at lower prices of around INR 125,000/t - exw but the higher raw material prices are making producers insist on higher prices.

Why are producers unwilling to reduce offers?

• Stainless steel prices on the higher side: Stainless steel prices remained high due to an abnormal increase in nickel prices caused by disruptions in supply. This encouraged producers to maintain high prices.
  
  
• High cost of raw materials: Ferro chrome prices are still high in the upstream market. High chrome ore and coke prices have raised the production cost. This is also encouraging Indian producers to not reduce their offers further.
  
  

Outlook
Major market participants believe that the prices would come down further on decreasing import sentiments emerging from the Chinese buyers.

One major producer explained, "It's difficult to reduce prices to below INR 125,000/t exw due to high costs of raw materials."