Indian ferro chrome prices fall on lower demand from Chinese SS mills

Indian ferro chrome prices fell by around INR 2,800/tonne (t) to INR 121,750/t, with some deals struck at even lower prices as well. However, the offer prices to the Chinese market have gradually increased to 128 cents/lb to match the domestic offers.

The downtrend in the market came right after major Chinese stainless-steel (SS) mills rolled over their ferro chrome procurement tender prices for October, suggesting little demand from the major Chinese mills.

Why have prices fallen?
Eased-out restrictions in China are the key reason behind the fall in prices. Power restrictions in Inner Mongolia, a major ferro chrome producing region in China, have eased and production levels have improved. However, stainless-steel output is yet to resume to previous levels, creating a little surplus of ferro chrome in the spot market. Prices in the Chinese spot market are under pressure and are currently at RMB 10,750/t ($1,680/t) exw-Inner Mongolia, China, down by RMB 100/t ($15.63/t) d-o-d and RMB 500/t ($78.17/t) down w-o-w.

Factors that may help Indian prices to regain

Limited market participants: There are very limited sellers in the Indian market, as many Durgapur-based producers have shifted to manganese alloys on better profit margins.
On the other side, the export market is muted on lower production volumes of steel in China, while the domestic buyers are refraining from buying at higher prices.

Higher production costs for Indian smelters: Indian ferro chrome smelters are facing increased power costs and higher coke prices are adding up to the higher production costs for the smelters. Meanwhile, chrome ore prices have also risen by 22% m-o-m, which is having a significant impact on the domestic market.

India might see production cuts: Increased production costs and reducing prices of ferro chrome have limited the profit margins of the ferro chrome business. Thus, many smaller mills that were mainly focused on the Indian spot market are shifting to manganese alloys, where the profit margin is much higher.

Outlook
The Indian market is hopeful that prices may rebound as winter approaches in China. The reduced production from the country may benefit the Indian market in terms of exports.