India ferro chrome prices fall further, market awaits OMC's auction outcome

Indian ferro chrome (HC 60%) prices continued its downfall this week as well by INR 1,200/t due to sluggish demand and the gloomy outlook of the Chinese market.

According to SteelMint's assessment on 13 July, Indian ferro chrome prices stood at INR 100,800/t exw-Jajpur. Majority of the deals were concluded in the range of INR 101,000-102,000/t exw. However, few deals also concluded below at INR 100,000/t exw.

Factors affecting prices

India's leading stainless steel producer trims prices up to INR 7,000/t: India's largest stainless steel producer has announced a price cut of up to INR 7,000/t due to poor demand in the market.Price for 304 grade has been reduced by INR 5,000/t, 200 grade by INR 3,000/t and 316 grade by INR 7,000/t, sources informed. Due to the sluggish demand, many stainless steel companies in India reduced their output, which had an impact on ferro chrome pricing amid limited demand. Due to sellers' insistence on maintaining their pricing and buyers shifting their purchases of stainless steel to Chinese suppliers, the bid-offer spread widened.

China's influence: Prices for domestic ferro chrome (Cr: 50%) in China remained constant at RMB 8,650/t ($1,208/t) w-o-w. Since China is the primary destination of India's exports, market developments there have a direct impact on the Indian domestic market. Major stainless steel bids that were announced for this month declined despite market players anticipating additional declines. Although the prices for material quotations from plants and steel mills were similar, most of the plants were filling long-term orders that had been placed before owing to a lack of demand in the downstream market. This influenced domestic buyers booking material at lower price.

High chrome ore prices: Imported chrome ore prices went up due to which Indian producers were unable to make profits. In addition, higher electricity prices also pushed up the price of producing ferro chrome. This discouraged producers to not reduce their offers sharply but prices dropped marginal as a result of the continued lacklustre demand.

Outlook

In coming weeks, a sharp decrease in prices is less likely as prices have reached near production cost which made domestic sellers not to panic sell and were in wait-and-watch mode. The market players are expecting that the outcome of the OMC's auction for chrome ore, which is scheduled next week, would assist to revive the market.