India: Ferro chrome prices rise by INR 5,000/t w-o-w

Indian ferro chrome prices increased by INR 5,000/t w-o-w. As domestic offers were much lower than exports sales to China, Indian producers started offering high prices to match export offers which found acceptance in the domestic market.

According to SteelMint's assessment on 9 February, ferro chrome prices were hovering at INR 121,500/t exw Jajpur.

In addition, there is speculation that chrome ore prices will rise due to strong Chinese demand, as ferro chrome production may be curtailed due to South Africa's electricity crisis. As a result, China may increase chrome ore imports to maintain ferro chrome consumption by increasing captive production or shift ferro chrome demand to India. This, too, has boosted ferro chrome prices.

Factors supporting prices

• Good domestic demand: Domestic demand remained strong this week as buyers were waiting for Vedanta's ferro chrome auction since last week. After the auction buyers started booking material after getting the clear picture that prices had gone higher than the previous week. SteelMint recorded around 5,000 t ferro chrome transactions in the domestic market this week. As a result, producers started offering higher prices as buyers showed higher acceptance of rising prices.
  
  
• Chrome ore prices upbeat: The rise in imported chrome ore prices in China has also pushed up ferro chrome prices owing to high production costs. On 3 February, China's chrome ore inventory was already at a drastically low level of around 2.03 mnt. The market was concerned about chrome ore supply constraints when port arrivals were low in January and February, despite the fact that consumption is expected to rebound strongly.According to SteelMint assessment on 7 Feruary, UG2 chrome ore was being offered at $290/dmt while Turkish chrome ore offers were at around $365/dmt on CNF China basis.
  
  
• Turkey's earthquake might impact chromite supply: A lethal earthquake has devastated Turkiye's main chrome ore producing area, Adana Province in the south. Many ports in south-eastern Turkiye have also been severely damaged causing delays and, in some cases, suspension. In addition, mines in Gaziantep and Hatay have been affected while many mines have stopped due to safety considerations. Although the Turkish earthquake has not yet had an impact on the spot market for chrome ore, the damage to port facilities and the disruption of inland transportation and shipments may exacerbate China's chrome ore shortage as Turkiye supplied around 1.02 mnt of chrome ore to China in 2022.
  
  

Outlook
Smelters are optimistic due to speculation about future chrome ore supply constraints. Because of high production costs this could have an impact on ferro chrome prices, according to sources.

Furthermore, buyers are concerned about further increase in ferro chrome prices due to the earthquake, which could be attributed to supply shortage of chrome ore. As a result, market participants anticipate a future slowdown in Chinese ferro chrome production as China blends Turkish chrome ore with charge chrome to produce ferro chrome. However, China currently has sufficient stocks, but the current situation of inland transportation and mine works in Turkiye may impact supplys in the near term.