India: Ferro chrome prices under pressure amid weaker stainless steel market

Indian ferro chrome prices inched down by INR 2,500/tonne (t) w-o-w following the downtrend in stainless steel prices. Weaker sentiments have made buyers cautious to book the material at higher prices, thus, forcing producers to lower their offers.

According to SteelMint's assessment on 19 May, ferro chrome offers were in the range of INR 126,000-128,000/t exw-Jajpur. Meanwhile, buyers' counter offers were at around INR 123,000-125,000/t exw-Jajpur.

Only a few producers were able to conclude deals at the offered levels whereas others had to close the deals at counter offer due to selling pressure, sources informed. SteelMint recorded around 1,000 t of ferro chrome deals in the domestic market.

Bearish stainless steel market weighs on ferro chrome

As stainless steel prices fell due to weak demand, the key Indian ferro chrome buyers also lowered their purchase prices in the spot market. Prices of 304 grade stainless steel CRC fell by INR 5,000 w-o-w to around INR 280,000/t exw-Mumbai. Producers were forced to reduce their offers amid selling pressure. Meanwhile, high inventories are causing stainless steel producers to cut production.

In addition, stainless steel production cut amid Covid restrictions has also impacted Chinese demand, resulting in price correction.

Furthermore, the increase in chrome ore (Cr2O3: 52-54%) base prices by 8% m-o-m to INR 22,190/t in the OMC auction held on 19 May deterred ferro chrome producers from reducing their offers further.

Meanwhile, some small buyers are waiting for Vedanta's upcoming auction on 20 May for further clarity.

Outlook
Considering weak demand and falling stainless steel prices, market participants expect ferro chrome prices to remain under pressure for the short-term.