India: Ferro chrome prices inch down as demand softens further

Indian ferro chrome producers are now offering ferro chrome at INR 66,000/t in line with limited demand from the domestic market. Buyers are negotiating for lower prices, while producers are now firm with their offers as they don't have scope for further correction.

The ferro chrome producers are holding on to their offers and waiting for the next round of OMC chrome ore auctions, before deciding on revising prices. OMC, a major merchant miner of chrome ore will conduct auctions for the sale of chrome ore on 10th Dec '20. However, the base price is yet to be decided.

We believe that the base prices of chrome ore should come down by at least 10% in line with the downtrending ferro chrome market. Meanwhile, demand from exports is still low and the Chinese buyers are inquiring for ferro chrome at lower prices, which is not feasible for the suppliers from India. Currently, Indian producers are offering at cents 69/lb CIF China. Meanwhile, prices for Japan and South Korea also remained unchanged at cents 71/lb and cents 70/lb CIF levels respectively.

China:
Tsingshan reduced the purchase price of high carbon ferro chrome by RMB100/t. This marginal decrease in the price was mainly due to the downtrending stainless steel market, clubbed with the weak spot prices at ports for South African chrome ore. It is expected that the increasing freight cost and higher inventory at the Chinese ports for chrome ore will further squeeze the prices of ores. Overall, the pricing sentiment for Chinese ferro chrome remains weak from both raw material and alloy sides.

Outlook:
Ferro chrome prices are likely to continue to be under pressure in the domestic market. However, the OMC prices would be a deciding factor for future pricing trend.