Caught between rising input cost and poor demand, ferrochrome
manufacturers fear difficult times ahead till at least the end of the
second quarter of this financial year.
Many producers, who have either compressed output or are busy
negotiating prices, expect prices of the alloy to recover from October
onwards, in line with projections for the global economic situation.
“I believe ferrochrome prices will stabilise now and move forward in
the third quarter (from October), when the international economy is
expected to turn around in a positive direction,” said V K Jodhani,
senior general manager, marketing, Balasore Alloys.
Ferrochrome prices move in accordance with the global economic
conditions, which give a cue about the demand situation for most
commodities, including steel. As a key ingredient for making stainless
steel, ferrochrome prices are also guided by international financial
Since stainless steel production is very low in India compared to
other large Asian economies, about half of the ferrochrome manufactured
in India — the total output is estimated at one million tonnes — finds
its way to steel mills in China, South Korea, Japan and Taiwan.
At present, local producers are looking to export high
carbon-contained ferrochrome at $1 a pound (lb) after adding increased
power rates and other costs, while key buyer China wants to buy the
commodity at between 92 and 95 cents a pound, citing shrinking demand
for stainless steel.
“China, being a leading producer of stainless steel, commands fixing
of ferrochrome prices. The price scenario has been inconsistent for some
time and that’s why we are looking for domestic sales,” said Deepak
Mohanty, senior commercial officer of Indian Metals and Ferro Alloys.
Of 32 million tonnes of global stainless steel output every year, China accounts for 40 per cent.
Asian stainless steel makers prefer to market their product in
Europe, though Europe itself is a large producer of stainless steel,
ranking second after China. The debt crisis in the common currency bloc
has dampened the demand for steel and other allied products in the
According to the World Steel Association (WSA), March crude
production growth remained steady at 1.9 per cent year-on-year, the same
as seen in February worldwide. While steel output rose in Asia during
the January-March quarter by 1.5 per cent to 242 million tonnes,
production declined by about four per cent in Europe, the data showed.