http://www.miningweekly.com/article/chinese-demand-prices-trigger-ferrochrome-green-shoots-in-india-2016-12-01/rep_id:3650

KOLKATA (miningweekly.com) – Green shoots are emerging in the ferrochrome industry in India, as a revival in demand from China and higher prices have spurred producers to bring idled capacity back into production.

“Improved Chinese demand and price realisations have definitely had a salutary impact on Indian ferrochrome producers,” Rohit Ferro Tech MD Ankit Patni told Mining Weekly Online.

“This has also led to a shift in focus from producers meeting domestic demand to greater shipments to overseas markets, like China, easing supply-side pressures in the domestic market,” he said.

Six months ago, domestic producers only marketed about half of their ferroalloy production in international markets, but several producers are now able to offer up to 80% of their production for international sales.

“However, it must be remembered that the Chinese market has always been unpredictable. But we are optimistic that the demand and prices will be sustained going forward.”

“There are pressures on Chinese steel mills to adjust finished mild steel production, given global overproduction. But our reading is that stainless steel production, with ferrochrome as a key input, will be maintained,” Patni added.

An indication of the firming up of the ferrochrome market could be gauged from higher prices. Ferrochrome with 60% chrome content has risen from Rs60 000/t (about $872/t) six months ago, to Rs110 000/t (about $1 600/t) currently.

However, Patni noted that a sharp increase in domestic chrome ore prices had tempered margin realisations from ferrochrome alloy sales. The price of chrome ore more than doubled at the most recent auction to Rs25 000 ($363/t). The auctions are held every two months.

Patni pointed out that most domestic ferrochrome alloy producers had stocked up ore and would be carrying sufficient chrome stocks until the end of the month. Producers are expecting ferrochrome alloy prices to gain further momentum, which will offset the steadily rising prices of chrome ore at the domestic auctions.

According to sources in the ferroalloy industry, green shoots in the industry have so far been limited to the ferrochrome product segment and are yet to be widespread across other alloy product categories.

For example, in the case of silico manganese with 60% manganese content, the price of the alloy has not even doubled at Rs63 000/t ($916/t) at present, from around Rs38 000/t ($552/t), even as the international price of coking coal, a key imported input constituting about 20% of the cost of silico manganese production, has spurted from $100/t to $300/t over the last year. Manganese ore prices have also increased by almost four to five times.