India's ferro chrome output falls 6% in H2FY'25 vs. H1. Will market rebound in FY'26? | BigMint

Declining ferro chrome prices amid rising ore prices affect production

Ferro chrome exports likely to drop nearly 20% in Oct-Mar'25 vs. Apr-Sept

Higher share of virgin raw materials in SS production to drive ferro chrome demand

Morning Brief: India's production of ferro chrome witnessed a decline of 6% to 650,000 tonnes (t)-0.65 million tonnes (mnt)-in October-March (H2) of financial year 2024-2025 (FY'25) compared with 0.69 mnt in H1FY'25, as per provisional data with BigMint.

Y-o-y, volumes were lower as against 0.66 mnt in H2FY'24. Data show that domestic ferro chrome production stood at 1.35 mnt in FY'24, with output expected to remain largely stable y-o-y in FY'25 despite the downtrend in H2.

Factors impacting production

Decoupling of ferro chrome and chrome ore prices: BigMint's benchmark high-carbon (HC) ferro chrome prices fell by 4% (compared to H1) in H2 of the current fiscal to INR 103,980/t exw Jajpur. On the other hand, chrome ore 50-52% prices increased from INR 24,800/t in H1 to INR 25,400/t exw in H2. For 48-50% grade of ore (based on chromite content), prices dropped slightly by around INR 1,200/t to INR 23,882/t exw in H2.

Therefore, higher raw material prices and lower ferro chrome prices resulted in curtailment of output by producers in order to mitigate losses.

Slowdown in ferro chrome exports: Exports account for generally 50% of India's ferro chrome production. Ferro chrome exports dropped by 19% to 0.22 mnt in H2 in comparison with 0.27 mnt in H1. This naturally had an impact on production.

Weak Chinese tender prices: Decline in tender prices of China's major stainless steel companies in H2, Tsingshan, Baosteel and TISCO, weighed on the domestic ferro chrome market. The tender prices were lower than domestic prices keeping exports limited.

Weak demand in the Chinese stainless steel market and sufficient inventories with producers, particularly Tsingshan, impacted prices. Spot prices in China were higher than tender prices and so Chinese sellers opted for production cuts due to lower realisations.

Domestic stainless steel market

India's stainless steel capacity is around 7.4-7.7 mnt for both long and flat products. Consumption of stainless steel is projected to have increased by 19% y-o-y in CY'24 from 3.5 mnt in CY'23. Current demand stands at around 4.2 mnt. Production increased approximately 14% y-o-y in CY'24.

Stainless steel production increased despite scrap imports registering a significant decline of 15% y-o-y in CY'24 due to increased arrival of substitutes like SS 300 series slabs, billets and NPI (nickel pig iron). Higher arrival of semis reduced dependence on scrap and ferro chrome consumption in stainless steel production.

Moreover, higher imports of finished SS also affected domestic demand for raw materials, such as ferro chrome. As per BigMint data, SS imports increased by 15% y-o-y in CY'24 to 1.19 mnt, thereby affecting domestic capacity utilisation and consumption of raw materials.

Outlook

With a few ferro chrome producers shifting to manganese alloys to make up for losses, there have been very limited offers in the market recently. On the other hand, acceptability of higher offers has not been seen due to weak stainless steel demand.

Sources say that with the hike in stainless steel prices in March, ferro chrome prices may also find support resulting in improved production volumes in the short term.

In the mid to long run, domestic ferro chrome production is expected to remain supported due to growth in stainless steel production, as well as SS domestic production shifting more towards the virgin raw material route, with scrap imports likely to confront global restrictions.

Morning Brief: India's production of ferro chrome witnessed a decline of 6% to 650,000 tonnes (t)-0.65 million tonnes (mnt)-in October-March (H2) of financial year 2024-2025 (FY'25) compared with 0.69 mnt in H1FY'25, as per provisional data with BigMint.

Y-o-y, volumes were lower as against 0.66 mnt in H2FY'24. Data show that domestic ferro chrome production stood at 1.35 mnt in FY'24, with output expected to remain largely stable y-o-y in FY'25 despite the downtrend in H2.

Factors impacting production

Decoupling of ferro chrome and chrome ore prices: BigMint's benchmark high-carbon (HC) ferro chrome prices fell by 4% (compared to H1) in H2 of the current fiscal to INR 103,980/t exw Jajpur. On the other hand, chrome ore 50-52% prices increased from INR 24,800/t in H1 to INR 25,400/t exw in H2. For 48-50% grade of ore (based on chromite content), prices dropped slightly by around INR 1,200/t to INR 23,882/t exw in H2.

Therefore, higher raw material prices and lower ferro chrome prices resulted in curtailment of output by producers in order to mitigate losses.

Slowdown in ferro chrome exports: Exports account for generally 50% of India's ferro chrome production. Ferro chrome exports dropped by 19% to 0.22 mnt in H2 in comparison with 0.27 mnt in H1. This naturally had an impact on production.

Weak Chinese tender prices: Decline in tender prices of China's major stainless steel companies in H2, Tsingshan, Baosteel and TISCO, weighed on the domestic ferro chrome market. The tender prices were lower than domestic prices keeping exports limited.

Weak demand in the Chinese stainless steel market and sufficient inventories with producers, particularly Tsingshan, impacted prices. Spot prices in China were higher than tender prices and so Chinese sellers opted for production cuts due to lower realisations.

Domestic stainless steel market

India's stainless steel capacity is around 7.4-7.7 mnt for both long and flat products. Consumption of stainless steel is projected to have increased by 19% y-o-y in CY'24 from 3.5 mnt in CY'23. Current demand stands at around 4.2 mnt. Production increased approximately 14% y-o-y in CY'24.

Stainless steel production increased despite scrap imports registering a significant decline of 15% y-o-y in CY'24 due to increased arrival of substitutes like SS 300 series slabs, billets and NPI (nickel pig iron). Higher arrival of semis reduced dependence on scrap and ferro chrome consumption in stainless steel production.

Moreover, higher imports of finished SS also affected domestic demand for raw materials, such as ferro chrome. As per BigMint data, SS imports increased by 15% y-o-y in CY'24 to 1.19 mnt, thereby affecting domestic capacity utilisation and consumption of raw materials.

Outlook

With a few ferro chrome producers shifting to manganese alloys to make up for losses, there have been very limited offers in the market recently. On the other hand, acceptability of higher offers has not been seen due to weak stainless steel demand.

Sources say that with the hike in stainless steel prices in March, ferro chrome prices may also find support resulting in improved production volumes in the short term.

In the mid to long run, domestic ferro chrome production is expected to remain supported due to growth in stainless steel production, as well as SS domestic production shifting more towards the virgin raw material route, with scrap imports likely to confront global restrictions.