Indian Ferro-Alloy Industry Faces Mounting Challenges Amid Global Uncertainty

Indian Ferro Alloy

The Indian ferro-alloy industry confronts severe headwinds as global tensions, escalating production costs, and declining export demand create a perfect storm of challenges. Despite chrome and manganese alloys from India remaining exempt from tariffs in most international markets, producers struggle with deteriorating market conditions and regulatory pressures that threaten operational viability.

Production Costs and Regulatory Burdens Squeeze Margins

Rising production costs severely impact Indian ferro-alloy manufacturers, particularly due to higher power tariffs in key regions like West Bengal. Consequently, producers must manage operational expenses with unprecedented precision to maintain profitability. Meanwhile, some alloy producers have strategically shifted capacity from ferro-chrome to manganese alloys, seeking higher margins amid challenging market conditions.

The Bureau of Indian Standards (BIS) quality order requirements add another layer of complexity for Indian ferro-alloy producers. Administrative costs have surged following the inclusion of ferro-chrome, ferro-manganese, and silicon-manganese in the BIS quality order list. Therefore, producers face mounting pressure to complete registration before the November deadline, as manufacturing and distribution without proper certification will be prohibited from November 8th.

Export Markets Deteriorate as Global Demand Weakens

Export prospects for Indian ferro-alloy products have deteriorated significantly across key international markets. Demand for Indian ferro-chrome under long-term contracts has plummeted by an estimated 60-70% compared to last year, forcing many exporters to rely entirely on volatile spot demand. However, this shift exposes producers to greater market uncertainty and price volatility.

European markets present particularly acute challenges for Indian ferro-alloy exporters. The EU's pending safeguard investigation into manganese and silicon-based alloys, launched in December, creates substantial uncertainty for market participants. As a result, European appetite for Indian manganese alloys collapsed to just 2-3 containers in April, compared to India's 300,000 tonnes of manganese alloy exports to Europe in 2024.

Additionally, mounting container freight costs of $50-55 per tonne from India to Europe further constrain exporters' competitiveness. Expectations suggest freight rates will increase further in late May, compounding the challenges facing Indian ferro-alloy suppliers.

The Metalnomist Commentary

The Indian ferro-alloy industry's current struggles reflect broader global supply chain disruptions and trade policy uncertainties affecting critical mineral markets. The combination of regulatory compliance costs, weakening export demand, and rising logistics expenses suggests a prolonged adjustment period ahead for Indian producers seeking to maintain their competitive position in international markets.