India: Ferrochrome prices tumble on limited buying from China

Indian ferro chrome prices were solely supported by domestic demand in the past few weeks. However, it is now turning weak along with Chinese demand. Notably, China consumes around 30% of India's total ferro chrome production. With Chinese buyers retreating, Indian traders had turned gloomy.

Current prices of ferro chrome are assessed at INR 109,000-112,000/t ex-Jajpur. Demand from China has waned off in the spot market, whilst offers remain stable at around 114 cents/lb CNF China.

Highlights of the week

• Vedanta auctions trigger further fall in ferrochrome prices:
  Vedanta conducted ferro chrome auctions on 21 Dec'21, in which bids were received at highest price of INR 109,500/t. The entire quantity was booked at marginally lower prices compared to the previous auction, which further triggered selling pressure on the producers.
  
  
• Supply concerns on South African chrome ore:
  The spread of Omicron, the new variant of Covid, has increased concerns of chrome ore availability in South Africa, which supplies nearly 80% of the raw material to China. Despite low alloy prices, UG2 prices increased by 3% w-o-w to $170/t. The buying appetite of Chinese alloy producers increased due to lowered port inventories and fear of the lockdown.
  Meanwhile, rising power tariffs are expected to take a toll on ferro chrome smelters as production costs may rise further by Apr'22. This is putting further pressure on Chinese mills.
  
  

Outlook
Indian domestic ferro chrome prices are expected to remain stable in the coming weeks. On the other hand, the Chinese market is likely to remain bearish ahead of the Winter Olympics.