India’s chrome alloys industry seems to be well-positioned amidst two factors. One is an apparent tug of war that is being played out on the global platform between two key players – the South African suppliers of chrome ore and chrome alloys and the Chinese buyers of chrome.
The second is the tussle between the ore miners and alloy producers in the domestic market.
Globally, the market is thus seeing a significant tussle of dynamics taking place and if neither player relents, in all likelihood, there will be a rollover of prices in March.
An important feature in the chrome alloy market is the exchange rate and how it has played out its role in impacting the ferro chrome markets internationally. The South African rand (ZAR) recently appreciated from 15.05 in December 2015 to 13.24 in February 2017, a 12 percent difference in an industry which is highly dependent on exports. This means the South African suppliers will have to make up in terms of prices. A 12 percent appreciation also means an almost ₹8,000-9,000 per ton price increase which would be a significant 7-8 cents. “Thus, there obviously has to be a tightening of prices from South African suppliers,” observed an industry source.
Conversely, the yuan has appreciated from 6.45 in December 2015 to 6.87 in February 2017, making imports a little more feasible. “So there will always be a tussle between South African and Chinese players when they have to buy chrome ore or coal.
We have seen a little strengthening of the Indian rupee but more importantly the ZAR has significantly appreciated which is going to give a tough time to the South African exporters,” the source added.
Two years ago, the ZAR had depreciated by almost 25 percent and consequently the South African suppliers had been able to price better.
In the 2.8 mt buying pie of China, South Africa leads, with 2.1 mt, which means both countries have enough muscle to pressure each other.
India’s share in China’s buying is at 0.1 mt and globally at 0.4 mt annually, which means almost 45-50 percent of what it produces is exported.
この記事は Steel Insights の March 2017 版に掲載されています。
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