Indian ferrochrome producers are expecting an increase in the prices of the commodity in the final quarter of 2013-14 on better demand prospect from China.
The ferrochrome rates, which are hovering around 84-85 cent per pound, could improve by a couple of cents to 87-88 cent per pound in the next quarter, they said.
“Demand from China has been very good. We are expecting more orders in next couple of quarters which should drive the prices to 87-88 cents per pound,” said Subhrakant Panda, managing director and CEO of Indian Metals and Ferro Alloys (IMFA).
The company, whose export revenue rose to Rs 522.75 crore during the first half of current fiscal compared with Rs 454.11 crore in the same period last year, exuded confidence that its profit margin would go up in the coming quarters.
“There is a slight recovery underway in the ferrochrome market and larger volumes going ahead will help us post better results,” Panda said in a statement while announcing the July-September quarterly result of the company.
The ferroalloy rates suffered a jolt at the start of this financial year in April, when Indian exporters were forced to sign contracts at as low as 76-78 cent per pound, as a supply glut in China affected demand. Though Chinese capacity has not shrunk, it is the restocking demand which is expected to push up the rates, exporters said.
“We hope it would touch 87 per pound in Dec- Jan period. We are getting good inquiries,” said an official of Visa Steel, a ferrochrome producer and exporter.
China is the biggest buyer of ferrochrome, used in making stainless steel. Even as recent rise in Chinese ferrochrome capacity has affected demand from India, producers said supply problems from South Africa, the major producer of the alloy after China, will continue to benefit Indian manufacturers.
“A lot of buyers did contact us during production problem in South Africa and we supported them at that time. Since we are counted as reliable suppliers, the demand would never drop significantly,” Panda explained.
Power problems in South Africa, which has world’s biggest chrome deposits, slashed ferrochrome output there significantly towards the end of 2012, diverting attention of Chinese buyers to opt for other small producers like Kazakhstan and India. China at present has about 3.5 million tonne ferrochrome production capacity and requires about 1.8 million tonne to meet demand from stainless steel mills.
India, at present, produces nearly one million tonne ferrochrome a year and sends nearly half of the alloy to China.
