Apparently, FY15 did not fare well for the Chrome ore industry. Taking a fall of about 28%, total Chrome ore production in India stood at approximately 2 MnT this fiscal. In FY14, India produced 2.8 MnT of Chrome ore and Chrome concentrate. The Chrome ore scenario affected the Ferro Chrome manufacturers the most, who took the heat in either one or both of the following ways. Firstly, the struggle for procuring Chrome ore at competitive prices to keep production cost from flaring up and secondly, facing low demand for Ferro Chrome due to dumping of Stainless steel in India by China, South Korea and Malaysia.
Why the decline?
The fall is largely attributed to Tata Steel’s Chrome ore production that could only reach 0.2 MnT in FY15, which is a huge setback. In FY14 Tata Steel produced 0.83 MnT, which is almost one third of India’s total Chrome ore production.
The sharp decline in the big Chrome ore miner’s production was due to the mining restriction imposed by the Supreme Court on its Chromite mine in Sukinda valley. The lease validity for the mine had lapsed and mining was stopped on 17 May’14. Operations resumed on 22 Jan’15, after receiving 3rd lease renewal from the Odisha Government.
Balasore Alloys’ acquisition of Rohit Ferro Tech’s Jajpur (Odisha) unit aimed at ramping up its production capacity to 250,000 MT pa by the end of FY15, could set an example for other Ferro alloy manufacturers in the country. The company has captive Chromite ore mines in Sukinda Valley at Jajpur (Odisha). The mines take care of Chrome ore requirement of the company. Balasore Alloys is one of the few Ferro Chrome manufacturing companies in the country having captive mines. This is a major competitive advantage to Balasore Alloys, since availability of Chrome ore is very uncertain and the price is also exorbitant.
Indian Exports & Imports
During first nine months of financial year 2015 (April- Dec’14), Indian Chrome ore import was recorded at 190,000 MT against 260,000 MT in FY14. The FY15 total import figure is likely to reach the same value as the last fiscal. Indian Chrome ore export in FY14 was 195,000 MT. It took a sharp fall during April-Dec in FY15 and was recorded at only 25,000 MT; unlikely to match previous year’s exports in the remaining months.
What’s the way out?
SteelMint assessed that it is very difficult for a Ferro Chrome business to be viable without having the support of captive Chrome ore mines. Instead of facing uncertain availability of the raw material and fluctuating price nodes, it will be better to win mines through aggressive competitive bidding in the auctions. The MMDR Act could bring about structural change in the Indian Chrome ore industry.
Join us at ‘International Ferro Alloys Trade Meet – New Delhi’ to evaluate Mn Ore & Chrome ore sourcing options and discuss on many other similar topics related to Ferro Alloys Industry.
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