Ferro Alloy Industry Braces For Competition From SE Asia

The domestic ferro alloys industry is bracing to tackle competition from Malaysia and Indonesia, even as it grapples with higher power costs at home to meet growing demand.

- Tamajit Pain

While 365,000 ton of extra capacity came into the market in 2016, an additional 180,000 ton is slated to come in during 2017, which is likely to bring down profitability.

Power tariffs in the country are high compared to other ferro alloy producing countries. Non- captive producers are at a disadvantage due to the cross-subsidy in power.

Another challenge facing producers in India is the non-availability of low phos coke. The anti-dumping duty on Chinese coke has also put an upward pressure on the cost of production. Non-availability of high grade manganese ore also affects the industry, D B Sundara Raman, Chairman, Indian Ferro Alloy Producers’ Association (IFAPA), said on the sidelines of a seminar organised by the Indian Ferro Alloy Producers Association (IFAPA) in Kolkata.

Global demand for ferro chrome in 2016 was 11.2 mt while supply was 11 mt. Some inefficient players were forced to shut shop during last year, leading to a deficit market for the first time in years. This led to an unprecedented price rise. Firming up of prices have led to a number of producers bouncing back into business and supply is also expected to grow by 3 percent to 11.7 mt.

However, demand is expected to increase by 5 percent in 2017 supported by growth in stainless steel. Globally, stainless steel is tipped to grow by 2.9 percent in 2017 driven mainly by growth in China and India. High carbon ferro manganese is, however, likely to see a decline in demand from 4.6 mt to 4.5 mt and supply from 4.7 mt to 4.6 mt. Silico manganese, on the other hand, is expected to see an increase in supply by around 5.6 percent to 14 mt from 13.2 mt, while demand is expected to grow by 2 percent to 13.96 mt from 13.7 mt.

Concern over cheap material from S E Asia

The IFAPA members said the South East Asian countries benefited from the availability of cheap power, which constituted 30 percent of the cost of production.