Indian ferro chrome market at cross-roads post-high bids in OMC's auction

Following OMC's chrome ore auction held yesterday, India's ferro chrome market has witnessed a notable lack of trade activities. SteelMint's assessment for Indian ferro chrome (HC60%, Si:4%) prices reported a w-o-w decrease of INR 4,200 per tonne (t) on 18 October compared to the previous assessment on 11 October. The price decline can be attributed to the market's reluctance to entertain higher offers, with most participants awaiting the results of OMC's chrome ore auction.

According to SteelMint's assessment on 18 October, prices for high-carbon ferro chrome (HC60%, Si:4%) were recorded at INR 112,800/t, exw-Jajpur. Approximately 4,500 t of transactions were settled within the price range of INR 111,000-113,000/t, reflecting selling pressure and rigorous negotiations.

On the other hand, high-carbon low-silicon ferro chrome (HC 60%, Si: 2%) prices remained stable w-o-w at INR 125,500/t exw-Jajpur on 19 October.

Market highlights

Few producers likely to cut output: The cost of production went up for many producers due to the high premiums fetched at last month's OMC chrome ore auction as well as for this month. However, the market was not able to support the higher offers. Due to the low profit margin, some producers were forced to lower their output hoping that would minimize the gap between supply and demand.

Indian stainless steel prices fall: Prices for the 304 grade stainless steel saw a fall of INR 1,000/t w-o-w to stand at INR 201,000/t while those for the 316 grade remained stable at INR 340,000/t, as assessed by SteelMint on 18 October. Decline in raw material prices kept the stainless steel market from going up. Some producers increased their scrap consumption instead of buying ferro chrome at higher rates while a few reduced their production. This resulted in lower demand for ferro chrome.

China's influence: Ferro chrome (Cr:60%) prices in China stood at RMB 9,050/t ($1,237/t) exw-Inner Mongolia, falling by RMB 100/t ($14/t) w-o-w. Demand remained limited and majority of the market players traded material only on need basis. Steel mills also trimmed production in October and are planning the same for November which had an impact on the prices. Due to this, Indian exports reduced as the gap increased between Chinese and Indian prices.

Outlook

The premium of 39-55% (INR 8,400-13,300/t) over the base price was achieved for the high-grade material (48-54%) at OMC's chrome ore auction on 18 October. Some producers turned cautious post-auction and are looking to put ferro chrome offers on hold for the time-being. Vedanta-FACOR's ferro chrome auction is also scheduled on 20 October which will give more clarity regarding price trends for the coming days.