Indian Metals & Ferro Alloys Ltd (IMFA)

When the large & efficient global peers are in financial stress, inevitably the FeCr industry has bottomed out!
Integrated players like IMFA will benefit as and when the realisations improve


south africa is about to implement export duty on chrome

china is the largest buyer of ferro chrome as per my understanding - what would be the effect of this event on the price of ferro chrome in global market ? Would IMFA get benefitted by this ?

CMP at INR 301 today - what is the upside that we are looking at ?

What im hearing is that South Africa is looking at imposing a export tax of 30% on chrome ore. This quarters price is at 130$ (this price is at a historic low) a 30% tax on the commodity would mean a $39 increase in the procurement price for the chinese companies. as things currently stands it takes 2.5tonnes of Indian chrome ore to make 1 tonne of FerroChrome (FeCr). While it takes 3 tonnes of SA ore for the same. Now that would mean $39*3= $117 upside potential for other producers. Since IMFA is fully integrated any price increase will only add to EBITDA of the company.

Also recently the Merafe benchmark prices (basis for IMFA and Posco contract) for the Jan-Mar quarter were announced and prices went up by 3.1% that itself would mean better price realisation for IMFA to a tune of Rs2k at min. The export segment contributes 90% towards the total sales. In the domestic market which is 10% of the sales for the company the prices have gone up from 66k to 70k.

IMFA’s quarterly production is about 65k tonnes with a max capacity of 70k tonnes. Now a Rs2k extra per tonne would mean 8.67crs of extra net profit for the company ((2000*.748365000.90)/1cr).
In the domestic segment also if the current increase of 4k sustains then we are looking at an incremental net profit of 1.95crs ((4000*.748365000.10)/1crs). This could result in extra profit of 10.5crs for the company per quarter. Please keep in mind this is without accounting for export tax.

If the export tax comes through it has the potential to more than double the profitability for the company. Multiple other factors are aiding price realisation for the company. I can get in to the other details also if forum members are interested.


China tender offer prices have also gone up by 200RMB that means a hike of around Rs.2200 that’s in line with the 3.1% increase in the Merafe index.


Domestic Prices of FeCr has hit 80000/t.


It’ll be similar to last quarter. However the mgt had guided for 240k tonnes for the year.

Merafe reports lower quarterly and YoY productions.

Is there any way to track Chinese inventory levels?

Merafe resources share price has gone up from 43 to 63 since Jan 19th. Tata has increased Feb contract prices for 50% purity FeCr from 5800RMB to 8000RMB. Indian equivalent price will be 95-96k. IMFA produces 60% purity FeCr. the price of IMFA’s product will be 20% higher than this. But they will enjoy higher prices only if these prices sustains for another 2 months. Since the export prices for this quarter has already been finalised. IMFA exports 80-85% of total production.


Tisco hikes ferro-chrome tender price by $340/t for February
China’s leading stainless steel producer, Taiyuan Iron & Steel (Tisco), has set its ferro-chrome tender price for February delivery at 8,000 yuan ($1,237) per tonne, the highest tender price issued by a major stainless steel mill since October 2017.

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India: SAIL concludes tender for 6,000t ferrochrome at INR 115,000/t
SAIL conducted reverse auction for 6,000t ferrochrome yesterday. The tender was for HC 60%with a tolerance of +/-3 % , and the acceptable size is 10-70mm. As per the market sources, the tender was allotted to Shyam metallic at INR 115,000/t delivered to Salem, Tamilnadu.


"Ferro chrome (ferrochromium) prices in the country have firmed up by nearly 46 per cent over the last 2-3 months on the back of reduced raw material supply and an anticipation of a pick-up in demand from the stainless steel industry.

Prices are currently ruling at around ₹95,000 a tonne, as against ₹60,000-65,000 a tonne in September-October, 2020. Production of chrome ore, which goes into making ferro chrome, was impacted due to Covid-induced lockdown which consequently pushed up prices of ferro chrome, said industry experts."


Latest FeCr price during the auction was between 95500 to 95900.
The kicker for IMFA will come from the next quarter’s Merafe Benchmark price that will be announced in March towards the last 15days. Jan- Mar quarter the price was 117cents/lbs this quarter looking the spot prices the benchmark should settle around 170cents/lbs.
Chrome ore prices have gone up from $130/t to $160/t
Electricity prices are slated to go up by a min of approx 11%.
Met Coke prices are also higher compared to Dec when the benchmark was announced.

IMFA is mostly integrated apart from Met Coke. they have a handle on the input cost. If the new benchmark comes in at 40% higher compared to last quarter, most of the price hike will flow to the bottom line of the company.


Prospects looks good. But with steel and iron ore prices cooling down in the past month, will it spill to other commodities. The surge in ferrochrome prices can be attributed to china’s greener ferroalloy industry norms.

All furnaces below 25MVA must be shut down. Producers who produce noble alloys, will have their product reviewed by end-February and be allowed to operate if the required qualifications are met.
Only one open or semi-closed furnace above 25MVA can be put into operation by operators, while the rest of the furnaces must be shut down. All open and semi-closed furnaces are required to complete the technological upgrading to closed furnaces, and only qualified furnaces can come back online after they are examined by the government before the end of February.
All furnaces, regardless of size, will be examined according to the energy consumption indicators at the end of February. Those not meeting the required kqualifications will be forced to shut down.

Also china has increased electricity rates with removal of discounts.

However china going into lunar new year from Feb 12 may dampen the demand in the short term.

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seems like good times are about to roll for imfa

Ive done some very basic number calculation for IMFA in Q3

FY’21 Q3 FY’20 Q3 FY’21 Q2
Sales in Rs (crs) 425.46 397.5 437.58
Sales qty 61116 60652 64528
Realisation 69615 65538 67812
CoGS 239.03 245.89 232.09
Production Qty 67206 64078 64582
Cost per tonne 35567 38374 35937
Gross Margin/tonne 34048 27164 31875

|Finance Cost|46.69|40.56|38.5|
|Other Exp|97.82|80.6|93.39|
|OtherExp/ tonne|14555|12578|14461|
|Total cost of production|336.85|326.49|325.48|
|Total cost of prod/tonn|50122|50952|50398|

Now look at the situation the realisation in the quarterly contracts will go up by 3.1%
They sold 10000mt to one of the largest Stainless Steel producers in the country at 94k/tonne much higher than 71-72k (contracted export price). Mind you that they make a gross profit of around ~20k/tonne when they export. This would meant that on this single large transaction they made a profit of 44k/tonne. that would mean an incremental profit before tax of 21-22crs in this quarter.

As per my estimates the sales in this quarter at 65k tonnes production and sales of 70k tonnes (6k tonnes was the closing stock at end of q3) will be around 520crs+ translating in to an EBITDA of 130crs+. PAT should be closer to 65-70crs.

I’ll be very grateful is someone can vet the numbers im estimating.

Disc. Im invested since 220 odd levels and have invested at multiple levels.

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Well the figure looks good , but the company has projected an EBITDA of 100 crores in Q4. Company has mentioned spill over of some orders from q3 to q4. Company seems very optimistic about prices for another 2 quarters. Chinese production will be a very crucial factor. If the furnace shut down in Mongolia continues, after the review in Feb the current prices may hold. Company has projected production of 250000 tonnes in the current FY.

Any idea on the current share of domestic sales


This quarter itself they have already sold 10k tonnes in domestic market at Rs 94k/tonne.
Just with this one transaction they will make a incremental PBT of 22crs. add to it increase in price of monthly contracts (in jan the prices went up by 30% this will reflect in feb) and quarterly contract(3.1% increase). Im very certain the EBITDA will be upwards of 120-130crs easily. Again this is my assessment i might be wrong.


The European charge and high-carbon ferro-chrome benchmark for the second quarter of 2021 has leapt up to $1.56 per lb Cr, a jump of 38.5 cents (32.77%) from the first quarter.


Worth a look. The company seems to be enjoying nice sectoral tail wind, for now.

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I understand Utkal C coal Block has been allotted to NALCO now. Any idea if it is the same coal block which as allotted to company and then de-allocated? if yes it could mean recovery of 350 crore odd which were stuck in the coal mine.