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Dilip Bisoi
With international charge chrome and ferro chrome prices plunging to a historic low of 33 cents per lb of chromium, chrome ore suppliers in India feel jittery. Realising that the market would not look up in near future and the inventories would pile up, Orissa Mining Corporation (OMC), the country's largest chrome ore supplier, has started offering discounts on chrome ore from the October-December quarter.
OMC has rolled over the ore prices - $111 per tonne of 52/50 grade, $106 for 50/48 and $95 for 46/44 grade - for the current quarter. But it now offers discounts on bulk offtake of ores. While the rebate is 20 per cent for 40,000 tonnes and above, it is 17 per cent for 30,000 tonnes and above. For purchase of above 20,000 tonnes, the discount is 15 per cent and for 10,000 tonnes and above 13 per cent.
"Despite the discount offers, there is no response from the market. In fact, there is nobody in the market to buy the ore," says a senior OMC official. According to him, there is absolutely no demand forore as there is a slump in the demand for stainless steel, the ultimate product, and a glut in the world ferro chrome/charge chrome market.
The South African charge chrome is being sold in the Japanese market at a surface price of 40 cents. The spot price in the Chinese market is hovering between 33 cents to 35 cents.
Worse, the market-watchers apprehend a further slide in prices of ferro chrome/charge chrome in the quarter. Under such a dismal condition, they are afraid of speculating for the January-March 1999 position.
Market analyst Anup Patnaik says ferro chrome/charge chrome prices has touched an all-time low during the third quarter of this fiscal. This, according to him, is because of the glut in the market. The major ferro alloys producers of the world, South Africa and China, have closed down many of their units as they were saddled with huge inventories, he says.
Given the present scenario, Patnaik says, the market will continue to sleep for at least another two quarters. As it appearstoday, the market may revive some time during July-September 1999, he adds. The adverse market condition has started telling on the performance of OMC. The corporation's exports of chrome ore has been badly affected during the first six months of this fiscal. It has exported 50,000 tonnes of ore, including concentrates, in the first half of 1998-99 against 75,000 tonnes during the corresponding period of the last financial year. OMC's chrome ore export is likely to slip below the 1 lakh tonne benchmark this year. The corporation had exported 1.12 lakh tonnes of ore last year as against 1.10 lakh tonnes in 1996-97.
The supply to the world market in 1995-96 was 1.30 lakh tonnes. Because of the sliding prices, the corporation's export earnings will also be affected this year. OMC's forex earning from ore business had dipped to Rs 30.38 crore last year from Rs 45.48 crore in 1996-97.
India's total chrome ore exports is also likely to be affected this year. The country's exports, which has come down to 3.5lakh tonnes in 1997 from 4 lakh tonnes in 1997, is expected to slip below the 3 lakh tonne mark in 1998.India has the third largest chrome ore deposits in the world, estimated at 182.5 million tonnes and accounts for about 12 per cent of the world's total production.
And, interestingly, over 98 per cent of the country's chromite reserves have been located in Orissa.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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