The ferrochrome industry has entered a new era after the quarterly benchmark system ended in June 2024 and the industry is seeking a new pricing mechanism to replace the benchmark system that had been criticised for many years.
Argus spoke with Indian producer Jindal Stainless' managing director Abhyuday Jindal about what the future pricing mechanism should look like and the challenges Indian stainless steelmakers face from lower-priced Chinese imports and increased volatility in raw material costs.
How are you pricing ferrochrome without a quarterly benchmark, and what future pricing mechanisms do you foresee?
Even during the regime of quarterly benchmark prices, countries such as India and China were not influenced by this benchmark. Instead, they set ferro chrome prices based on realistic demand and supply. They negotiated prices close to the actual consumption.
Even European consumers had been buying chrome at discounted levels than the benchmark levels because it was unrealistic. In the future, we expect the Asian model based on realistic demand and supply will continue to succeed.
How has cheaper Chinese stainless steel imports impacted the margins of domestic steelmakers?
Imports from China have posed a long-standing challenge to the industry. While other major stainless steel producing nations have imposed duties on Chinese imports, India has yet to take similar actions.
As one of the largest and fastest-growing markets for stainless steel, India becomes a key target for dumped and subsidised imports. Continuous dumping from China puts immense pressure on MSMEs and disrupts the local manufacturing ecosystem. Additionally, it creates an uneven playing field for domestic manufacturers, often forcing many to shift from manufacturing to trading.
What is the outlook for ferrochrome prices and how will this affect production costs and demand?
Recently, raw material prices for stainless steel had been volatile owing to availability concerns of raw material ore. Nickel, one of the major input materials, has displayed unpredictability on the London Metals Exchange (LME) in the range of $15,000-21,000/t and now currently is around $16,000/t. Some of this volatility was driven by Ni ore prices in Indonesia.
Similarly, chrome ore shortages are impacting ferrochrome availability and prices. In India, the majority of chrome ore resources are available from only two companies, of which only one has been consistent with supplies. This is the reason why we have had to resort to imports for meeting chrome requirements.
