With Ferrochrome Demand DOA, Why Have Prices Risen?

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Adding to the troubles plaguing stainless market supply/demand fundamentals are inflation and the rising USD/rupee rate.

The price of ferrochrome, the key raw material needed for producing stainless steel, has gone up by an average of 15 percent until July 2013. Electricity, too, has become more expensive. So, on the one hand, consumption has taken a hit, on the other, producing stainless steel just got a little more expensive.

N.C. Mathur, who heads the Indian Stainless Steel Development Association, has claimed that the entire industry was under severe stress, because of which even the servicing of loans taken by steel companies is becoming a huge problem.

On the ferrochrome front, too, China has become the lead player in terms of production, resulting in higher stainless steel output.

High-carbon ferrochrome output during 2012 reached 8.95 million tons, with China securing the prime position by producing 3.1 million tons. Indian output, on the other hand, has been hovering around the 1-million-ton mark. Demand for ferrochrome was expected to be marginally higher in 2013, but like stainless steel production, demand has plunged due to lower fresh investments in infrastructure.

This sector is looking for a turnaround in the US economy, because any upward swing would mean a positive impact on white goods consumption, and a revival in construction activity, which is obviously good news for stainless steel manufacturers.

When will that actually happen? Leave a comment below!

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