India: Ferro chrome prices rebound amid favourable auction outcome, new tenders from China

Indian ferro chrome prices rebounded significantly by INR 6,000/t w-o-w after experiencing a seven-week decline. The upswing was driven by high production costs after strong prices were seen in the recent chrome ore auction conducted by Odisha Mining Corporation (OMC) on 20 July. Additionally, market participants, especially from overseas, were awaiting the release of new tender prices from China, which were introduced during this week.

According to SteelMint's assessment on 27 July, Indian ferro chrome prices stood at INR 104,000/t exw-Jajpur. However, there were relatively lesser deals reported by SteelMint, as players adopted a more cautious approach, preferring to observe the market before making significant moves in an up-trending market.

Factors supporting prices

High bids in OMC auction: With OMC being a primary influencer of domestic prices, all attention was focused on its auction scheduled on 20 July. The entire auctioned quantity found buyers, and chrome ore (44-54%) from South Kaliapani mines commanded a premium of 24-43% above the base price. The outcome exceeded expectations, as an aggressive bidding took place despite lower ferro chrome prices in the previous week. Moreover, the increased success of this month's OMC's auction can be attributed to limited bookings seen in June's auction, along with good demand. Additionally, the anticipation of material scarcity during the rainy season may have also contributed to the upsurge in bids. As prices surged, production costs also rose, leading to an increase in ferro chrome prices.

Optimistic outlook from China: China's major stainless-steel producers, Tsingshan and TISCO, released ferro chrome purchase prices for August. Producers were more willing to conduct trades under term contracts, especially when tender prices were higher than spot market prices, sources said. Stable stainless-steel production further contributed to an increase in ferro chrome purchases, with the Inner Mongolia region experiencing a rise in production due to reduced electricity charges.

China's optimistic market outlook had a positive effect, leading to a surge in export offers, which in turn boosted domestic prices.

Outlook

Given the current circumstances, prices are anticipated to continue rising, but at a gradual pace. The ongoing monsoon season, which leads to an increased moisture content in chrome ore, is expected to further contribute to the upward movement of ferro chrome prices due to hike in production costs. Indian ferro chrome producers are seen holding offers and may increase these next week, sources opined.