India: Ferro chrome prices on uptrend on China demand surge

Indian ferro chrome (HC60%, Si:4%) prices rose by INR 2,000/tonne (t), driven by an increase in the offers of domestic producers in response to a surge in export demand from China.

According to SteelMint's assessment on 10 August, Indian ferro chrome (HC60%, Si:4%) prices stood at INR 106,000/t exw-Jajpur. Around 3,500 deals were concluded in the range of INR 105,000-107,000/t. Meanwhile, ferro chrome (HC60%, Si: 2%) prices remained largely range-bound at INR 114,000/t w-o-w.

Factors supporting prices

Chinese domestic prices up on supportive downstream demand: China's domestic ferro chrome prices rose by RMB 100-200/t ($14-28/t) to RMB 8,700-8,800 ($1,207-1,220/t) in the previous week. Because of increase in downstream demand and rising profits, stainless steel production remained at a high level. Due to this, the demand for ferro chrome surged along with buying interest. In particular, prices for 304 grade stainless steel increased by RMB 1,000/t ($139/t) w-o-w.

Despite the fact that domestic prices in India were higher than those in China, export volumes still increased as there was an oversupply of the material in India.

Elevated prices of domestic chrome ore and stainless steel: At the OMC's chrome ore auction held on 20 July, the material was sold at 43% above the base price. Raw material costs increased, therefore ferro chrome prices began to rise.

Due to a decrease in market availability over the previous two weeks, prices of stainless steel (316 grade) also increased. However, demand for other series remained steady. There was a global shortage of raw materials, and prices rose as market sentiments improved, particularly in the local market and in China.

Outlook

A further price hike in the coming weeks is possible given the current trend. However, the demand from China will mostly determine the extent of increase. Furthermore, Vedanta-FACOR's ferro chrome auction, held on 9 August, got concluded at an H1 price of INR 105,800/t for the bigger lot of 10-150 mm, according to sources. So, prices are expected to stay above this range.