India: Ferro chrome prices plunge w-o-w on limited buying

Indian ferro chrome prices have been tumbling since May 2022 and further declined this week by INR 4,100/t. There is limited buying due to production cuts undertaken by the stainless steel manufacturers. A high level of inventory and weak demand in the export market also contributed to the fall in ferro chrome prices.

According to SteelMint's assessment on 1 June 2022, a limited volume of around 1,500 t was sold in the domestic market by major producers in the price range of INR 114,500- INR 116,000/t exw-Jajpur, excluding GST.

Highlights:
The price of stainless steel remained under pressure on a weekly basis due to lack of buying enquiries and lower transaction volumes in the spot market. As of now, 304 grade CRCs are being offered at around INR 265,000/t w-o-w. Moreover, the increase in the export duties has reduced export transactions.

Also, stainless steel buyers are more likely to buy imported material due to their lower prices. Therefore, producers had to reduce their production by 30-40% due to narrowed demand, which led to a decline in ferro chrome prices.

"Buyers are booking material in small lots, so they can obtain discounts after each transaction is completed. As a result, keen buyers with resources could get a better deal than the prevailing offers of INR 114,000-116,000/t exw-Jajpur," explained one of the major buyers.

Furthermore, many small buyers are anticipating that prices will decline further after Vedanta's auction on 4 June. In addition, depreciation of the Chinese currency and improvement in Chinese production also shifted buying interest to domestic products. Both factors also contributed towards reduced demand.

China market overview
China's ferro chrome (HC60%) prices stabilised w-o-w at RMB 9,750/t ($1,461/t) exw-Inner Mongolia, as a result of low trade volumes and stagnant market conditions. The spot trading volume was also low, and the bearish market sentiment resulted in a stalemate in supply and demand. Moreover, the inventory of chrome ore remains low amid the drop in arrivals at domestic ports.

Outlook
According to the present scenario of dull domestic demand and subdued export inquiries, market participants (mainly buyers) expect further fall in prices in the near term.