India: Ferro chrome prices rise further on favourable export demand

Indian ferro chrome prices rose by INR 2,300/t w-o-w amid healthy demand in the export market. Furthermore, Chinese prices have started to rise, which also kept prices supported in India.

Though higher prices in the Indian market were not acceptable this week, sentiments in the export market, especially China, remained strong, fuelling sellers' expectations that prices may increase further. The majority of Indian smelters are now offering ferro chrome at around INR 104,000-105,000/t in the domestic market. However, transaction prices were at INR 102,000-103,000/t exw, sources informed.

Factors supporting prices

• Demand picks up in China: Although news has tricked in of some production cuts in China's south, and despite the increasing number of Covid cases, China is gradually opening up. Indian smelters anticipate increased demand in the near term. This has influenced smelters to maintain higher prices because they anticipate a steady flow of enquiries amid tight supplies in China.
  
  
• Purchase tender prices rise: The tender price for ferro chrome has been increased by RMB 500/t ($ 72/t) to RMB 8,495/t ($ 1,221/t) by major stainless steel producers. Converted to INR, it is around INR 107,000/t on CIF basis. As a result, smelters are attempting to achieve that level of parity. This has resulted in price rise. However, the domestic market continues to resist accepting material at higher prices amid moderate demand in the stainless steel segment.
  As per credible sources, there is no change in demand in the domestic market; the change has occurred in China with good demand and price increase, which was directly reflected in the domestic market. This boosted ferro chrome prices.
  
  
• Chrome ore price hike: Chrome ore prices increased as a result of low stocks at Chinese ports. Meanwhile, as of 27 December, UG2 chrome ore was offered at around $255/dmt, CNF China.
  
  

Outlook
Ferro chrome prices are expected to remain high in the near term, as market participants anticipate strong demand from China until 10 January, i.e. prior to the Chinese New Year (CNY) holidays.