Indian ferro chrome prices weaken on bearish stainless-steel sentiments

Indian ferro chrome prices dropped by INR 4,400/tonne w-o-w due to weak domestic demand amid down trending of stainless-steel market. According to SteelMint's assessment on 23 March, Majority of smelters were offering at around INR 111,000 - 112,000/t exw Jajpur.

The demand for Indian stainless steel is still low. The majority of buyers were more interested in Chinese stainless-steel coil because the prices of duty-free imported coil were lower than domestic offers. As a result, stainless steel producers were forced to reduce production as higher levels of stock piled up, lowering prices.

Furthermore, liquidity crises caused by the end of the fiscal year also impacted stainless-steel prices. March is a difficult month for sellers, according to a Mumbai-based dealer, but price recovery is expected after the second week of April.

Meanwhile, prices of 304-grade hot-rolled coils (HRCs) fell by INR 10,000/tonne ($121/t) week on week to INR 215,000/t ($2,601/t) exw, continuing the downward trend, assessed on 21 March. This compelled ferro chrome buyers to haggle hard and book material at lower prices.

Key demand and supply drivers

• Weak domestic demand: Domestic demand has slowed as buyers have entered a wait-and-see mode in anticipation of a price drop. Small buyers were reserving the material in small quantities. As a result, both demand and prices fell.
  
  
• Exported ferro chrome offers shrunk: Indian producers have reduced their export offers, particularly to China, in response to a drop in spot prices, which were around RMB 9,000 /t Ex-Guizhou for HC 55% on March 22. Prices dropped primarily as a result of weak demand and news that some stainless-steel mills were slowing production.
  Furthermore, improved Chinese ferro chrome production has reduced China's interest in Indian material. As a result of the limited demand, producers were forced to reduce offers in order to maintain price parity with Chinese spot prices.
  
  
• UG2 Chrome ore prices firm: South African UG2 chrome ore prices remained firm w-o-w at around USD290/t on CNF China basis, assessed on 21 March. Because of the electricity crisis, the country is focusing on supplying chrome ore rather than ferro chrome. However, ferro chrome supply constraints from South Africa due to production cuts have not yet impacted prices due to weak global demand, according to sources.
  
  

Outlook
Demand in India is low, with both buyers and sellers appearing to be on the sidelines. As a result, ferro chrome demand is expected to remain weak, with lower offers in the near term, sources informed.