India: Ferro chrome prices escalate by INR 4,000/t w-o-w

Indian ferro chrome prices shoot up by INR 4,000 to INR 70,000/t amid scant availability of ferro chrome on continued shortage of chrome ore.

Why the shortage of Chrome ore in India?

Since the past three months, chrome ore mines have been going through a lot of instability, which has been affecting the production levels. Three major chrome ore mines were auctioned and hence are not operating at present. The mining operations might take another two-three months to start at the very least.

Meanwhile, the purely commercial miner - OMC has had a severe contraction in the production levels due to the lockdown imposed by the govt.

The mining activity was severely hampered by the labour shortage in line with strict government norms. Meanwhile, even post lockdown, mining was hit by monsoons and as majority of mines are open cast in nature, they are flooded and are still not operational as desired.

How does it impact the ferro chrome producers?

Producers without captive chromite mines are severely affected and few might have to halt operations due to ore shortage. Meanwhile, importing ore is still not an option as the dispatches may take another 2 months to reach from South Africa. A perfect time for the exporters to increase allotments in the domestic market As the domestic prices are escalating to higher levels, the major producers who are inclined mostly towards exports are shifting their focus to cater to the domestic market. Most of the exporters are booked with long term contracts, however, this may not stop them from allocating more supplies to the domestic market.

What is the expectation from OMC, and how will it impact the market?

The smaller producers are longing for OMC to auction ore as soon as possible. However, there is a high possibility that the auction might fetch close to 50% higher bids than the floor prices, which will again put the producers under high risk of loss if the export market doesn't pick up.