Indian Ferro Chrome exports rose by 9% in FY19 compared to the previous year despite a bearish stainless steel market. China and South Korea remained the top two importers of Indian Ferro Chrome. Exports to China registered a marginal growth of 9% while exports to South Korea escalated by 40%. Exports to Taiwan slumped by 33% in FY19 on a Y-o-Y basis. India was the biggest exporter to South Korea followed by South Africa. Due to sluggish stainless steel prices and the prevailing production cuts, Ferro Chrome imports to China were affected. Moreover, the dumping of finished stainless steel from China, Indonesia, Japan, and South Korea has adversely affected the demand and prices of stainless steel in the domestic market and has led to a subsequent plunge in Ferro Chrome demand in India.
What is driving South Korean Exports?
South Korean exports spiraled by 40% in FY19 owing to a robust stainless steel market. Indian producers reported that the demand from South Korea remained stable for most of the year and that the orders they received were long-term contracts, which was an incentive for producers to shift the focus from China to South Korea. In the second half of FY19, prices in the domestic market started falling aggressively and, therefore, producers decreased their domestic allocation and shifted their focus towards exports. Moreover, the depreciation of the INR against the USD made exports more profitable.
So far as the future outlook goes, Indian producers are keener for exports owing to the dull stainless steel market. Moreover, the situation is unlikely to change anytime soon, with long-pending infrastructure projects yet to take off thereby boosting steel demand.