Indian Ferro Chrome Buyers Hold Out For Drastically Lower Prices

Indian high carbon ferro chrome export price levels face severe erosion under pressure from sinking Chrome Ore prices in China and immensely low Tender price set by Chinese Stainless Steel mills for May'17.

Earlier, major stainless steelmakers like Baosteel and Taiyuan Iron & Steel (Tisco) lowered their May purchase prices by a mammoth 2750 Yuan and 2700 Yuan respectively M-o-M. As a result, Chinese buyers were only amenable to prices lower than 80 cents/lb CIF, though such price levels are not acceptable among Indian sellers yet.

SteelMint learned from market sources that the drop far exceeded expectations and this has immediately pressured the import market sentiment and prices.

Many Chinese stainless mills will be conducting maintenance at their plants in sight of weak demand and prices in the stainless steel market which has since resulted in output cuts among some stainless steel producers, reducing demand for ferro chrome.

An Indian producer source admitted halting offers to China as "it is too low to be attractive," and suggested that even if they were to accept a price level of 76 cents/lb CIF China for June delivery, the Chinese buyers would use their offer to only negotiate with other Indian producers, and thus end up bringing the market down further. He further highlighted that there is no real demand coming in from China and that their offers are just being put to test.

SteelMint assessed that other overseas markets have also pulled out and are in a wait-and-watch mode, for any deal between India and China to conclude.

Chrome ore Prices Come Crashing Down

Ferro chrome prices are also under pressure from falling chrome ore prices.

Chrome ore prices in the Chinese spot market have fallen this month by around 60% and South African 40-42% chrome ore was heard trading this week at USD 130/MT CIF China. Many attributed this sharp price fall to the weak Chinese Stainless Steel market and low demand for ferro chrome further pressurizing Chrome Ore prices.

SteelMint assessed that the impact of crashing Chrome Ore prices on the spot Indian Ferro Chrome prices would be significant, as most of the big Ferro chrome producers in China would likely ramp up production and Chinese traders' import requirement could fall substantially.