India: Ferro chrome prices may start to gain soon

Indian ferro chrome prices have bottomed out and the prices are currently at INR 61,000/t since last few weeks. Although, the demand is yet to recover by a considerable amount. However, with a gradual increase in production levels of Stainless-steel, the demand for ferro chrome might soon witness an uptrend.

Moreover, the supply of chrome ore in the domestic market has been under big uncertainty as OMC hasn't concluded an auction post May, and the chances for it in the upcoming month is also very low due to unavailability of sufficient chrome ore with OMC. The mining industry was earlier hit by the lockdown and then now the monsoons have severely impacted production. However, plenty of sub-grade (Cr2O3 <40%) chrome ore is available with the company for auctions, but the demand for the same is not much. In May, out of 1,00,000t of sub-grade ore auctioned only 18,700t was booked, the rest remaining unsold.

Chinese Tender prices might not fall by substantial levels as expected earlier, as the Stainless-steel prices in China is rising.

Meanwhile, in South Africa, the prices of Chrome ore have bottomed out, and is expected to finally rise in the coming weeks. The ferro chrome production is reduced in the country due to higher power tariffs during the winter months there. In the past few weeks, South African Rand depreciated as against US Dollars, which was also a prominent reason in the falling prices.

Current Assessments
The prices for ferro chrome assessed by SteelMint are as follows:

• Ex-Jajpur: INR 61,000/t,
  
  
• CNF China: cents 66.5/lb,
  
  
• CNF Japan: cents 70/lb, and
  
  
• CNF South Korea: cents 69/lb
  
  

Future Outlook:
Indian Ferro Chrome production is down as many smaller producers have shut their operations due to no profit margin or non-availability of chrome ore. This will check the oversupply situation in the market. Meanwhile, reduced supply of Chrome ore could also push the Indian ferro chrome prices upwards soon.