India: Ferro chrome prices hit 3-month low on weak stainless steel market

Indian ferro chrome prices (HC60%, Si:4%) fell by INR 4,300/t w-o-w in comparison with the previous assessment on 1 November. Prices fell to their lowest point in three months as end-user demand, especially from the stainless steel industry, stayed weak.

As per SteelMint's assessment on 8 November, high-carbon ferro chrome (HC60%, Si:4%) prices stood at INR 106,400/t exw-Jajpur. Around 700 t of deals were finalised in the price bracket of INR 105,000-107,000/t.

Additionally, prices of high-carbon low-silicon ferro chrome (HC 60%, Si: 2%) also dropped INR 4,000/t w-o-w to INR 114,000/t exw-Jajpur on 9 November.

Factors keeping prices under pressure

Weak stainless steel sentiments: Stainless steel prices in India for 304 and 316 grades fell by INR 7,000/t and INR 10,000/t w-o-w to INR 192,000/t and INR 330,000/t exw-Mumbai, respectively, as assessed by SteelMint on 8 November. A number of reasons, including upcoming festivals, ongoing elections in states, and liquidity concerns affected costs. LME Nickle prices also decreased. As a result, there was less demand and purchases were made based on immediate requirements.

Production cutbacks: A few major producers reported shutting down some of their furnaces as profit margins in the domestic market reduced. Buyers, on the other hand, anticipated further reduction in prices triggering a decline.

China market overview: There were reports of production reduction and maintenance activities in China. This may result in a drop in ferro chrome production this month. However, it will not have a major impact as current production is sufficient for steel mills. Market participants also expect prices to fall further, as some companies face inventory pressure and have reduced their prices in order to improve cash flow.

Outlook

Given the current market scenario, prices may see a further correction in the coming days. A clearer picture will emerge post OMC's chrome ore auction in November.