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ASIA FERROCHROME: Limited upside seen for Indian prices on large supply

Highlights

Market participants in Asia are expecting higher offers from Indian high carbon ferrochrome suppliers in the near term but there are doubts about whether higher offers could be realized given the current large supply in the market.

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Following the recent appreciation of the rupee against the US dollar, some Indian producers are looking to offer high carbon ferrochrome (58-60% Cr) at 87-88 cents/lb CIF China after the weeklong Chinese National Day holidays end on October 7, according to Indian sources.

Offers for Indian-origin high carbon ferrochrome were at 85-86 cents/lb CIF China in late September, with market participants pegging the tradeable price at 84-85 cents/lb CIF China on September 27. There was no price assessment for high carbon ferrochrome (58-60% Cr) CIF China and charge chrome (48-52% Cr) CIF China on October 4 due to the Chinese public holiday.


An official with an Indian producer also said 87-88 cents/lb CIF China would be a probable offer level from Indian producers given the current exchange rate for the rupee and US dollar.

"But given how the Chinese market is now, buyers may not accept such offers," the official said. There is ample supply for Chinese buyers in the market now given the large amount of imports into China, new ferrochrome projects in China and rising production in South Africa, he said. "So I don't see business being done at those levels."

Market participants in Asia also see demand in China remaining stable at best towards the end of the year. "Demand is neither good nor bad now, but supply is rising. I don't see any reason for prices to increase," said another Indian source.

Meanwhile, Platts Friday assessed the spot price of high carbon lumpy ferrochrome imported into Japan unchanged on the week at 88-92 cents/lb CIF Japan. Offers for Indian material were heard at 90-95 cents/lb CIF Japan this week, though industry sources put the tradeable price at 88-92 cents/lb CIF.

Traders in Japan also haven't ruled out further upside to Indian offer prices due to the appreciation of the Indian rupee, but most also expect demand in Japan to remain stable at best in the near term.

"Demand in Japan is not getting better in the near term and beginning next year there is a lot of new ferrochrome capacity [from South Africa and China] coming onstream," said one trader.

The assessment for lumpy high carbon ferrochrome imported into Japan is based on the following specifications: 60-65% chrome, maximum 8% carbon, 2-4% silicon, 0.02-0.05% phosphorous, maximum 0.05% sulfur, lump size 10-100 mm.

--Vivian Teo, vivian.teo@platts.com
--Edited by Jonathan Fox, jonathan.fox@platts.com