India: Ferro chrome prices rise on raw material cost push

Indian ferro chrome (HC60%, Si:4%) prices increased by INR 1,300/t w-o-w due to rising manufacturing costs, which enabled many smaller deals to conclude at higher prices. Also, fluctuations in domestic trade prices along with anticipation of good demand from China and Europe helped to boost the prices.

According to SteelMint's assessment on 31 August, Indian high carbon ferro chrome (HC60%, Si:4%) prices stood at INR 120,000/t exw-Jajpur, with bulk deals being concluded in the range of INR 115,000-118,000/t and deals at lower volumes concluded in the range of INR 119,000-122,000/t. However, high carbon low silicon ferro chrome (HC60%, Si: 2%) prices saw a drop of INR 1,300/t w-o-w.

Factors affecting prices

Fluctuating trade prices: OMC's chrome ore auction conducted on 18 August fetched high premium especially for high grade material. As a result, ferro chrome production costs rose and several manufacturers began quoting higher prices. In addition, a few domestic players were also not active in the market. Hence, due to less number offers, prices gained support.

Buyers, however, resisted because they wanted to watch the market to see if the pricing would hold at that level. As a result, deals were closed at lower prices when done in bulk and at higher prices when done in smaller quantities. Additionally, some participants, who were active in exports, engaged in domestic trades because the latter offered greater price realisation.

Influence of stainless steel: Prices for stainless steel in the domestic market kept increasing, majorly influenced by growing raw material costs and high demand. Prices rose as producers started to restock raw materials in response to the unexpected jump in demand. In the coming months, stainless steel demand is predicted to remain strong, which will contribute to an increase in ferro chrome prices.

China's significance: Domestic ferro chrome prices in China remained steady at RMB 9,300-9,500/t ($1,294-1,322/t) w-o-w. For the upcoming month, ferro chrome demand from steel mills is expected to stay high and last until October. The market was also experiencing material shortage, which contributed to the price increase. The September tender prices for two of China's largest producers of stainless steel, Taiyuan Iron and Steel Corporation (TISCO) and Tsingshan, also increased by RMB 300/t ($41/t). Due to South Africa's limited export, UG2 chrome ore prices also increased.

Outlook

Market participants, especially producers, are optimistic regarding a potential price increase. They anticipate strong demand from Europe in the near future, which could potentially lead to a scarcity of material in the domestic market. And this trend may subsequently drive up prices. On the other hand, buyers' unwillingness to accept higher offers from China may contribute towards a correction in ferro chrome prices.