India: Ferro chrome prices fall by INR 2,000/t owing to selling pressure

Indian ferro chrome market has been very volatile after the OMC chrome ore auctions. Chrome ore prices are now highest in two years, and to aggravate the depression of the alloy producers, stainless steel prices are not picking up.

Thus, the buyers of ferro chrome are unwilling to book any material at higher prices. Producers feel that currently, it is still feasible to work at lower levels than standard prices, but in the coming months, when shortage of ore will be intensified, the feasibility of it will again be in question.

Currently, producers in India are quoting at INR 74,000/t, however, a few deals have happened at around INR 71,500-72,500/t by some producers to mitigate urgent cash requirements. Meanwhile, due to low demand, the buyers have a stronger hand in negotiations.

Simultaneously, international prices are also in downtrend due to lower demand for Stainless steel during the Chinese National Day week-long holidays. However, there is still some optimism among the Indian producers, as with the approaching winters, Chinese power tariffs will increase, which will lead to some production cuts of ferro chrome. Moreover, the environment norms will be stricter in the winter months, which could lead to some forced shutdowns and in turn better demand from the Chinese market.

Indian ferro chrome producers are a bit wary of the future of chrome ore prices as OMC hasn't offered much material in the past auctions, and currently, OMC is the only source for ore procurement. As there has not been any clarification yet on that front from TATA Steel, it is still uncertain whether they will sell chrome ore in the open market?

However, we believe that with the hefty premium the company would have to pay on the ores, prices of chrome ore would be substantially higher than the present levels. Thus, it can be concluded that any fall in the ferro chrome prices below such levels will hurt the alloy manufacturers.