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Ferrochrome makers bleed as chrome ore prices soar

Production capacity down by 50% in absence of captive chromite mines

Dillip Satapathy  |  Bhubaneswar 

High domestic chrome ore price bleeds ferrochrome makers

The fall in prices of ferrochrome, and simultaneous rise in prices of its key input, chrome ore, have pushed the Indian producers, without captive mines, to the brink.

Around 50 per cent capacity — without support — has shut down, over the past year. Of nearly one million tonne capacity in the country, 40 per cent producers do not have their own chromite mines.

According to industry sources, prices dropped from Rs 69,625 per tonne, in November lasts year, to Rs 60,000 per tonne this October.

In contrast, floor price of chrome ore and concentrate in auctions conducted by state-owned Odisha Mining Corporation (OMC), a major supplier of chrome ore to industry, has increased from Rs 9,649 per tonne to Rs 10,325 per tonne in the same period, aggravating the losses of the industry.

Odisha has 98 per cent of the country’s chrome ore reserve, making the a key player in meeting the raw material need for production of this key steel intermediary.

To make the matters worse, the private merchant miners, such as Tata Steel, B C Mohanty & Sons and Misrilal Mines are taking the auction price as benchmark for sale of chrome ore in the domestic market, even as their realisation from export of ore and its concentrates is much less in the backdrop of commodity glut in the international market.

Ferrochrome makers bleed as chrome ore prices soar
had recently floated tender for export of chrome ore and concentrates. The freight on board (FOB) price bid at the tender for chrome ore was $205 per tonne, which worked out to ex-mine realisation of Rs 7,500 per tonne. The current floor price at the auction for same grade of ore is Rs 9,945 per tonne which is 33 per cent higher.

Similarly, for December shipment of 38,000 tonne of chrome concentrate, MMTC’s tender had fetched FOB price bid of $210 per tonne, which effectively means ex-mine realisation of Rs 6,500 per tonne, whereas the current floor price for same grade at auction is Rs 10,325 per tonne, reflecting a wide variation in domestic and export ore prices.

Over the last one year, the price of chrome concentrates in the international market has reduced by 15 per cent, whereas has increased the floor price by seven percent.

Pushed to the wall, Kalinga Nagar Industrial Association (KNIA), representing producers like JSL Ltd, VISA Steel and Rohit Ferro Tech Ltd, etc, has written a letter to the MD, Girish S N, to fix the price for long term buyers, based on either prevailing export price of friable ore or by back calculating and deriving the ore rate based on price.

The industry is incurring an operational loss of Rs 12,000 to Rs 15,000 per tonne on due to the high price of chrome ore, sold through e-auction. should bring down the floor price by at least Rs 5,000 per tonne, for survival of the industry, stated secretary, Ranjan Mishra, in the letter.

First Published: Tue, December 01 2015. 22:33 IST