Indian ferro chrome prices tumble on limited demand from China

The Indian ferro chrome market has been witnessing a downward trend since last month on improved Chinese domestic production. A lack of demand from China, which consumes 30% of ferro chrome produced in India, has turned the market bearish.

Currently, ferro chrome prices are at around INR 110,000/tonne (t) ex-Odisha, but a producer is heard to be selling at around INR 105,000/t due to financial concerns. This pressurised other sellers to reduce their prices, as buyers bid aggressively. Ironically, the largest ferro chrome producer in India is still offering at INR 115,000/t and informed SteelMint that they are being able to easily achieve cents 118/lb CNF China basis.

Today, major stainless steel mills in China, Tsingshan, and Baosteel, released their ferro chrome procurement tender prices, which were down by around RMB 895-900/t ($141/t). Prices declined due to lower spot market and stainless steel prices. However, this may add more pressure on Indian exports prices.

What factors can determine future price trends?

• Availability of South African chrome ore: The spread of Omicron, the new variant of Covid, has increased concerns of chrome ore availability in South Africa, which supplies nearly 80% of the raw material to China. Despite low alloy prices, UG2 prices increased by 3.5% w-o-w to $162.5/t. The buying appetite of Chinese alloy producers increased due to lowered port inventories and fear of lockdown.
  
  
• Increased Chinese production: Chinese ferro chrome production increased by around 12% m-o-m in Nov'21, according to sources. This has resulted in limited demand from China. Meanwhile, Chinese domestic prices began falling due to ease in supply in the spot market. However, production in China is expected to be curbed in December on increasing pollution in the southern part of the country, which will likely increase demand from India.
  Indian ferro chrome prices are expected to remain under pressure in the short-term, and rebound before the winter Olympics in China as the dual control policy gets more stringent.