Chrome ore prices shoot up 16% in OMC e-auction

Buyers say low supply and expectation of domestic demand supported price

High grade chrome ore rates went up to Rs 14,522 per tonne in the e-auction of the Odisha Mining Corporation (OMC) from Rs 12,037 a tonne quoted in the August auction. Buyers said prices moved up as the state-run miner had limited stocks this time.

"This time OMC had limited quantity for sale, which is why prices rose sharply," said a participant in the auction process.

OMC had offered to sell 48,500 tonne different grade friable chrome ore in September 11 auction, lower than 78,600 tonne offered in August. Out of the total quantity, 70 per cent is reserved for local users while the rest is available for outside Odisha buyers.

In the recent auction, the mining company had offered 12,600 tonne chrome concentrate, lower than 13,000 tonne offered in the previous sale. Concentrates are available for all kinds of buyers including state-based and outside state user industries.

While rates of the highest grade chrome ore having 54 per cent chromium content increased as much as 21 per cent, all other grades witnessed price surge of similar magnitude. On an average, the rates were 16 per cent higher than previous auction, said an official of OMC.

Nearly all of India's chrome ore is produced in Odisha, with OMC having control of a little over a third of production.

The recent rise in chrome ore price is likely to influence rates of ferrochrome, produced by smelting molten chromite. Ferrochrome is used in production of stainless steel. Most ferrochrome producers in the state export the commodity as there is limited production of stainless steel in the country.

India sends most of its ferrochrome to China, the largest stainless steel producer in the world. However, demand from overseas market has been dull for past few months, coinciding with overall weakness in global markets. Ferrochrome producers said, they were expecting a rise in local demand and hence price rise would not affect sales.

"In India steel production mainly starts after monsoon season. We hope the demand for ferrochrome in local market would rise starting November," said an official with a state-based ferrochrome producer.

India produces about 2-3 million tonne stainless steel every year with major leaders being Salem steel plant of Steel Authority of India Ltd (SAIL) and Jindal Stainless Ltd (JSL).