Globally Allied Indian Ferro Alloys Industry Well Integrated With World Market

After protracted stagnation, prices in the global steel and raw material markets are showing an uptrend. The ferro alloys industry, a major contributor to the steel-making process, has been behaving in tandem.

- Tamajit Pain

A price rise in materials like manganese and chrome ores has put the non-integrated ferro alloy producers in a difficult position. Producers are also being forced to deal with high power tariffs and low demand in a bid to stay afloat.

However, the events of 2016 have clearly indicated that the Indian ferro alloys industry is fully integrated with the global ferro alloys and downstream markets. The Indian industry is no longer insulated and, importantly, has emerged as a strong global contender.

Ferro alloy demand is primarily linked to consumption of steel and stainless steel. While growth in both these end-user industries will pick up slightly, domestic steel demand is expected to grow faster compared to stainless steel demand in the near term. With steel demand poised to increase over time to 111 million tons by 2020, ferro alloys demand is expected to increase over time.

Thus, growth in demand for manganese alloys will be higher compared with chrome alloys, which is used mainly in stainless steel manufacturing.

The industry will continue to see weak exports and growing imports. Lower realisation and rise in working capital requirements will keep the pressure on margins and debt-servicing indicators.

Ferro alloys are used in steel-making and consist of less than one percent of the total raw material required for producing the metal.

Despite being a very low constituent, ferro alloys are vital additives in steel making. The principal function of ferro alloy addition is to increase the resistance of steel to corrosion and oxidation.

It improves hardenability, tensile strength at high temperatures, wear and abrasion resistance and increases other properties like creep strength etc.