“We expect demand coming back to normalcy shortly,” says IMFA’s Deepak Kumar Mohanty
As Shanghai opens up post prolonged Covid-induced shutdown, ferro-chrome prices are expected to witness some improved buying sentiments and firm up here in India.
Prices of the alloy, a key raw material in stainless steel making, have seen a 2-5 per cent dip in India across auctions, with prices varying in the ₹1,14,000 per tonne range, due to weak buying sentiments in the country and delayed buying due to production cuts undertaken by the stainless steel manufacturers.
A high level of inventory and weak demand in the export market also contributed to the fall in ferro chrome prices.
According to Deepak Kumar Mohanty, Senior Vice President, Head – Ferro Alloys Business Unit, India Metals and Ferro Alloys Ltd (IMFA), a lower demand in China and logistics bottlenecks pulled down demand.
SteelMint data shows “a limited volume of around 1,500 tonnes was sold in the domestic market” in the ₹1,14,500-1,16,000/ tonne price range, exw-Jajpur.
Sources say, on a weekly basis, there was a lack of buying enquiries and lower transaction volumes in the spot market.
The imposition of export duty has also reduced export transactions and for stainless steel players, raw material imports look to be a cheaper option at the moment. Furthermore, cheap imports from Indonesia are taking an increased share of the local market.
Melting activity in India is estimated to have reached 1.1 million tonnes in January–March period, but could face pressures in subsequent quarters. Small buyers are anticipating that prices will decline further after Vedanta’s auction on 4 June.
Market sentiments to improve
“Lockdowns in Shanghai have already been lifted and we expect demand coming back to normalcy shortly,” Mohanty told BusinessLine.
According to him, the company was “well placed”, considering that it was an “integrated model player”. Most of its tonnage has already been booked on a long-term basis. “We expect realisations to improve to around ₹1,25,000 per tonne in the current (April-June) and next quarter (July-September),” he said, adding that data suggest that the stainless steel segment could grow at 4 per cent (globally) to 58.6 million tonnes.