India: Ferro chrome prices fall to 4-month low amid supply-demand mismatch

Indian ferro chrome prices fell further by around INR 2,450/t w-o-w amidst higher selling pressure and low demand.

SteelMint observed that prices dropped to 4-month lows amid disparity in supply-demand.

Meanwhile, Chinese demand from the spot market is also muted as buyers were anticipating a further fall in prices.

According to the assessment on 16 June 2022, ferro chrome (HC60%) prices were hovering at around INR 107,000-108,000/t exw-Jajpur and around 3,000t of deals have been concluded at these levels.

Why did prices fall?

• Weak domestic demand: Smelters received limited inquiries this week since most buyers were awaiting Vedanta's ferro chrome auction. Also, stainless steel smelters were holding back their procurements and not ordering large quantities as they expected prices to fall further. The prices dropped as a result.
  
  
• Export demand fizzles out: The Indian producers were more worried about the dwindling Chinese demand, as this is India's largest market. Stainless steel production has yet to increase after the pandemic, so demand remains muted. India exports 20,000-30,000 t ferro chrome per month to China, but the exports have decreased since April. Consequently, the domestic market is oversupplied. In addition, demand from Japan and South Korea is also weak amid a dull market. This has led to a price drop amid selling pressure.
  
  

China market overview:
China's ferro chrome market continued to be slow this week due to the downtrend in commodity trading. Spot prices are still also lower than the index prices. Ferro chrome (HC60%) prices were at around RMB 9,650/t ($1,459) exw-Inner Mongolia, down by RMB 100/t ($15/t) w-o-w. Moreover, the stainless-steel market was still at a low level. On the basis of the current market conditions, it seems that the cost of ferro chrome is still extremely high at this point amid supply-demand imbalance, sources say while stainless-steel downstream markets are facing pressure on supply and demand is low. The market for ferro chrome is expected to remain stable in the short term.

Outlook
Several market participants believe that prices might drop further as Chinese import sentiment decreases. The upcoming Chinese steel mills tenders are also expected to be reduced in the coming weeks.