India: Ferro chrome prices soar as international market picks up

• Indian market optimistic
  
  
• Chinese prices escalate to decadal highs
  
  
• Indian stainless steel mills bleed on higher prices
  
  

The Indian ferro chrome market witnessed a significant increase in prices by INR 5,000/tonne (t) w-o-w to around INR 111,300/t, with a few deals being sealed at even higher levels as well.

The Chinese market further boosted the already up-trending prices of ferro chrome in the domestic market. The sources of ferro chrome have shrunk in the country with only a few producers catering to bulk orders. Meanwhile, smelters reported that there are increased inquiries from the Chinese market and buyers are bidding by up to 115 cents/lb.

The major increase in the prices can be attributed to the increased Chinese prices. Prices of ferro chrome in the Chinese market have increased, since the start of the week, by 17% w-o-w, while today prices swung up by around RMB 1,000/t ($155/t) to RMB 11,000/t. Although, no deals have been concluded at this level, the prices are expected to be accepted soon. The last traded deal was at around RMB 10,400/t in Inner Mongolia, and at around RMB 10,800/t in other regions.

Though the electricity restrictions in Inner Mongolia have been eased, producers are busy catering to the previous orders pile-up. It is unlikely that the spot market will see any easing in supply in the near term, sources said.

A major steel producer in northern China is out of inventory, while many smaller steel plants are out of stock which is a cause for concern in the market.

Meanwhile, the South African UG2 prices increased by $5/t to $170/t after the civilian unrest broke out in the country followed by major ports declaring Force Majeure. Although the situation has improved and the backlog in orders is being cleared, the major miners have increased their prices and there is still a supply gap that needs to be filled.

The stainless steel market in China is still optimistic and offering added support to the Chinese ferro chrome prices.

However, the situation is quite contradictory in the Indian market, where the major part of the production is for the 200 series material which is mostly used for making utensils. According to the major stainless-steel producers, with the country being in continuous lockdowns, demand for utensils has suffered largely, bringing down the demand for stainless steel. Thus, such an increase in ferro chrome prices has left them bleeding. Some of the producers might also resort to lowering their production levels if prices do not ease. Although the sentiments from the stainless-steel mills remain pessimistic, many special steel and stainless producers are trying to book material in anticipation that prices may increase further.

Outlook
Indian smelters remain optimistic due to scarce supply and increasing Chinese inquiries. However, some producers are cautious because of the chaotic market scenario in China. They feel, there might be some clarity after the Chinese market settles down.