Indian ferro chrome prices regain momentum on supply worries

Indian ferro chrome prices rebounded on supply concerns as a few plants were not operational since the past few months. Many smaller plants also switched to manganese alloys amidst better profit margins and higher demand. Thus, there are only a handful of producers in the market with large production volumes.

The production of ferro chrome in May'21 fell by around 20%, mainly due to the closed units. This created supply crunch in the domestic market. Although, consumption and demand are still tepid due to a sluggish stainless steel market, prices picked up due to limited producers in the domestic market.

Few deals were concluded at around INR 96,500/tonne (t) for bulk orders earlier this week, before the Vedanta auctions fetched bids of around INR 96,600/t for 10-150 HC ferro chrome. Post-auctions, producers increased their offers to INR 97,000-98,000/t for smaller deals.

Meanwhile, export enquiries remained absent from Korea and Japan for the spot market. Chinese buyers are also not willing to pay higher prices for imports. There is a strong demand from the European market amidst supply shortage, but Indian smelters are more focused on China, which is the largest market for Indian ferro chrome.

The Chinese market is bullish on increasing costs of electricity and higher stainless-steel sales. This has fuelled hopes of the Indian producers for further price hikes. However, bulk buyers are still reluctant to book at these prices.

Outlook
It is more likely that the producers may increase prices due to constrained supply. However, smelters are waiting for the next round of chrome ore auctions and the results of the upcoming ferro chrome tenders by the Chinese stainless steel mills.