Chrome ore prices fell 12 per cent over the quarter at last week’s e-auction by the Odisha Mining Corporation (OMC), showing signs of weaker demand for the stainless steel raw material.
The 54-grade ore, highest among the lot, fetched Rs 11,087 a tonne in the auction conducted in the last week of December, lower than the Rs 12,635 a tonne quoted in September. Other grades also sold at a proportionately lower rate.
“The prices fell despite the fact that this time, we did not differentiate between rates offered by domestic and outside buyers,” said an official of OMC, mining arm of the state government.
In earlier auctions, the rates were separately declared for domestic and outside buyers. Those for the former were always lower than out-of-state millers, since the government policy mandates reservation of chrome ore for local producers, which has resulted in supply surpassing demand in the state. Many companies had moved court against the price discrimination and the latter, in an interim order, had asked OMC to implement a uniform price structure until the case was disposed.
In the latest auction, OMC chose the highest price offered by any type of buyer as the final one and all buyers were allotted chrome ore at the same rate. The December auction offered 92,000 tonnes for sale, of which it got bids for 86,000 tonnes, leaving 6,000 tonnes of raw material unsold.
Weak global sentiment also affected the prices, said the OMC official. The central government’s Mineral and Metals Trading Corporation, the only government-run agency to export chrome ore, has not raised those prices since September, citing poor sales, and that had affected the rates in Odisha, too, he explained.
Industry leaders said the price fall would not translate into lower rates of the end-product, ferrochrome, used in making stainless steel, as other production costs were too high.
“The chrome ore price fall is not significant and the power production cost is still at the higher side, due to coal rates. There is no reason why we would lower ferrochrome rates,” said an official of Jindal Stainless Ltd, which often participates in the OMC auction for its Kalinganagar plant.
India sends most of its ferrochrome to China, the largest stainless steel and steel producer in the world.
Nearly all of India’s chrome ore is produced in Odisha, with OMC having control of a little over a third of production. It has stopped selling chrome ore in the export market, in line with the state government view. It switched to an e-auction route in June last year, to get better price realisation.