Indian ferro chrome prices slump on tepid demand

Indian ferro chrome prices took a deep dive of INR 4,000/t w-o-w amidst slow buying interest from the domestic stainless-steel mills. The domestic buyers of ferro chrome resisted buying as they were informed about the tepid demand from the Chinese market.

In a recently concluded auction due to the variance (Rs. 2,500) in H2 and H3 prices, ambiguity regarding prices among buyers and sellers increased further. Ferro chrome buyers are insisting on lower prices and are resisting any purchases.

However, a confluence of factors have affected the slump in prices.

Lagging Chinese demand
Chinese buyers are reluctant to import the material as the market is bearish and they are certain that by the time the material reaches the plant, the prices would be further down. Thus, the buyers are more inclined towards procuring from the domestic market. Indian exporters informed SteelMint that the Chinese buyers are refraining from paying more than 121 cents/lb for HC 60%, CNF China. Meanwhile, the container shortage and increasing freight cost are adding up to the resistance to importing material from other countries.

Improved ferro chrome production in China
The lag in ferro chrome imports is mainly due to the improved production of the material in the country after the energy restrictions have been eased. Meanwhile, production of stainless steel in China is expected to be low for the month. This has further triggered the fall in the ferro chrome purchase tender prices by Tsingshan.

The domestic prices of ferro chrome in China have come down by RMB 200-300/t in various regions following the release of the purchase tender prices.

Indian ferro chrome smelters worry over exports market
Indian ferro chrome smelters were disheartened when the Iron and Steel section was omitted from the RoDTep scheme of export incentives. The demand from Asian markets is lagging, while it is good in the European market. However, the hands of exporters remain tied as vessels are not available at ports and the freight cost to Europe has increased by around 750% as compared to normal levels. A few exporters reported that their material is stacked at the ports since the start of the month for exports and is waiting for vessels to come in.

Outlook
There is a strong anticipation that the prices of ferro chrome may fall further as the Chinese steel mills are resorting more towards using scrap amidst increased ferro chrome and nickel prices.