Global FeCr supply cuts: South Africa accounts for ~20% of global FeCr production. Three players account for the majority of the supply: Samancor (1.5 MT), Glencore, and the Glencore-Merafe JV (1.5 MT). Over the last two months, Glencore has shut down all of its furnaces and ceased production of FeCr (earlier 8 lac MT and now 7 lac MT). This reduces ~10% of the global supply for FeCr! Such supply cuts mark the bottom of a commodity realisation as these capacities are relatively efficient because of captive chrome ore.
IMFA could be a direct beneficiary of an increase in FeCr realisation, as it is completely backwards integrated in Chrome ore and Electricity, the two most important costs for manufacturing FeCr. The ongoing greenfield capex of 1 Lac MT will provide 40% volume growth. Its balance-sheet has transformed from INR 700 Cr net debt to INR 800 Cr net cash over the last four years, which would help in funding the expansion from internal accruals. It currently trades at 10 year median EV/EBITDA valuations of ~5x and cashflow yield of 15%.
Followed by the shutdowns mentioned earlier in the thread, ferrochrome realizations have now reached at the yearly high levels. Given that the RM costs have not increased in this timeframe, next few quarters should see significant better profitability.
If this gets imposed, South African ore prices will move upwards, which will further elevate the cost of RM for China- the largest manufacturer of FeCr as they import 80% of their RM- ore, from South Africa.
This in turn will increase the Ferro chrome prices for the industry due to this cost push.
IMFA gets benefitted as its FeCr prices are globally derived while its RM is procured captively- so leads to further margin increase.
IMFA completes acquisition of long awaited Tata furnace. Post this, their sales volume will be doubled to 0.5 Million MT over the next two years! Management targeting 4L MT volume next year itself- volume growth of ~50%. With the current spreads, the inorganic capacities payback is <2 years!
Company looks to be at a very interesting juncture. Back of the hand very rough calculations at 4 Lakh tons volume in FY27 and 4.75-4.8 Lakh tons volume in FY28 at an EBITDA per tonne range of 20k-22k brings out an EBITDA of 950-1050 Crores in FY28 if the Ferro Chrome prices stay stable. Any uptick in the global ferrochrome prices as the situations is turning out to be, can be a cherry on top.
A very interesting indication to the acquisition was them suddenly raising the inventory few quarters ago to record high and now they’ve clarified that the chrome ore requirements will also be captively catered. The Ethanol project wasn’t a very interesting part to me personally but overall things seem to be working out quite well with favorable demand supply scenarios globally.
Interesting insights from Tata Steel Q2 Concall- explains why IMFA is at a structural advantage to even the larger companies because of its captive chrome ore mine under the old regime. Also revalidates the higher CAPEX IMFA has budgeted for going underground.
Management has tweeted about the current situation:
South African Ferro Chrome Situation - Interesting article to go through- Samancor and Merafe could get better negotiated terms for Electricity and Ferrochrome output can face some revival in SA.
But, secondary effect could be potentially higher Chrome Ore costs to the largest Ferrochrome Producer- China if that happens which could increase their FerroChrome production prices. If things go this way- South African smelters may increase the production with Chinese Ferrochrome production taking a cost hit. Also, Mr Panda rightly mentions that it’s not a sustainable way to produce Ferrochrome- You can only give preferential electricity costs for so long.
The focus to revive Ferrochrome Smelters is obvious for South Africa given Ferrochrome is a five-times multiplier of raw chrome ore (https://x.com/fyiitsdeepak/status/1963866910157844482) value but South Africa is increasingly switching to the exportation of much lower valued raw chrome ore, which provides its global ferrochrome competitors with increasingly greater opportunity to benefit from the fivefold value-add that it is pivoting away from.
Link to the management tweet: https://x.com/subhrakantpanda/status/2008756835394920935
Ferrochrome maintained its upward trajectory till December (Source: Jindal Stainless Q3FY26 investor deck). January has been especially volatile for most metals. Any one has access to Jan’26 trend?
Still the trend is up even in Jan 26:
Below are some notes from AI 2026 predictions:
Ferrochrome Price Trends in India
The market outlook for ferrochrome in India throughout 2026 remains cautiously optimistic, primarily driven by domestic infrastructure development and consistent export demand to markets like China and South Korea.
-
High Carbon Ferrochrome: Prices for HCFeCr typically range from 68,000 to 120,000 INR/metric ton (or 100 to 138 INR/kg) depending on purity and location (e.g., ex-works Jajpur/Bhubaneswar).
-
Low Carbon Ferrochrome: LCFeCr commands premium pricing, generally between 160 to 275 INR/kilogram.
-
Export Prices: Indian export prices for HCFeCr (58% min Cr) to China have remained steady at approximately 94 cents/lb CNF in early January 2026, with offers to South Korea at 97 cents/lb CNF.
Key Insights
-
Supply Dynamics: The market is tight due to logistical challenges in major producing regions like South Africa and increased raw material (chrome ore) costs, which are keeping prices elevated.
-
Demand Drivers: Expanding stainless steel production for construction, automotive, and general infrastructure projects in India and the wider Asia-Pacific region is the key driver of sustained demand.
-
Market Growth: The global ferrochrome market size is projected to grow to $9.19 billion in 2026 at a CAGR of 5.9%, indicating overall strong market health that supports Indian prices.
-
Producers’ Sentiment: Producers with captive chrome ore mines, such as Indian Metals & Ferro Alloys Ltd. (IMFA) and Tata Steel Mining Ltd., are in a better position to manage production costs and navigate margin pressures.
Hope this is helpful.
Happy Investing,
Karthik
Disclosure: I am having exposure to this counter from last year lows. My views can be biased.
Recent tweet from the MD on current price trend. Views welcome 
https://x.com/subhrakantpanda/status/2017074964340633830?s=20
Indian Metals & Ferro Alloys – Q3 Results Update
Financial Highlights
- Revenues up YoY 9%, which was expected given the company is operating at near full capacity utilisation. Additional capacity ramp-ups are expected only towards FY26 end onwards.
- EBITDA up YoY 28%, driven by better ferrochrome realisations.
- EBITDA margins 23.38% vs 20% last year.
- PAT up YoY 40%.
- Exports were 85% of total revenue vs 88% last year. This is in line with management’s guidance of gradually increasing domestic mix (long/medium-term guidance discussed in last concall was ~60% exports / 40% domestic). No meaningful difference in realisations between export and domestic markets.
Volumes YoY (tonnes)
- Ferrochrome production: 67,196 vs 65,865 (up ~2%)
- Ferrochrome sales: 64,802 vs 65,490 (down ~1%)
- Chrome ore raising: 265,468 vs 174,515 (up ~52%)
Other Updates
- TSL plant agreements signed; statutory approvals pending. Expected to go live by end of Q4 FY26
- 100,000 TPA greenfield expansion on track for commissioning by June 2026
- Ethanol plant slightly delayed; now expected March 2026 (earlier estimate: Jan 2026)
- Cost of production per tonne expected to decline due to better logistics proximity once TSL plant becomes operational
- Future chrome ore requirements expected to be met through captive chrome ore mines
Will post further updates after concall.
Indian Metals & Ferro Alloys – Q3 Concall Notes
1. Pricing & Margin Outlook
- Domestic ferrochrome prices are ₹118,000–120,000. Expected to stay around this in near future unless any exceptional event happens.
- EBITDA margins of Q3 expected to sustain at similar levels in Q4.
2. Ore Raising Target
- FY26 → 850,000 tonnes
- FY27 → 1,000,000 tonnes
3. Consumption metrics (useful for cost tracking):
- Coke → 0.65 tonnes per tonne of ferrochrome
- Chrome ore → 2.5 tonnes per tonne of ferrochrome
- Coke prices volatile and slightly rising, but no significant impact on per tonne costs currently.
4. South Africa Situation – Management View
- Power costs for 2 companies reduced from 0.135 to 0.87 for 1 year.Reduced cost does not even cover full overhead expenses of Eskom, so clearly doesn’t look sustainable. Subsidy borne by government to restart production.
- If South Africa production picks up → chrome ore exports to China reduce → China production reduces.
- If China production does not reduce and both China + South Africa produce → ferrochrome prices fall → wipes out non-integrated / less competitive players → benefits fully integrated players like IMFA.
- China is a consumer and has significant export duty on ferrochrome exports → limits global price impact.
- Overall management sees demand-supply gap persisting for next 1–2 years.
5. Capex Roadmap
Greenfield Project
- ~60% capex done this year.
- Remaining /40% (/₹300 crore) to be spent next year.
Ethanol Project
- Majority capex done this year.
- Residual ~₹50 crore next year.
Mines
- ~₹200 crore capex planned next year.
- Total ~1000 cr. planned over 4-5 years
Overall Capex Outlook
- FY27 → ~₹600 crore + some general capex.
- FY28 → ~₹400–500 crore.
- FY28 majority capex towards underground mine project.
Current Year Capex
- ~₹370 crore already done.
- Next 3 months → ~₹270–280 crore planned.
6. Funding & Balance Sheet
- Majority capex funded through internal accruals.
- Some debt if required (already have ~₹470 crore loan sanction).
- Peak debt expected → ₹450–470 crore.
- Peak Debt/Equity expected → ~0.5.
7. Capacity & Volume Guidance
- Increased volumes start reflecting from Q1 FY27 (new capacity going live).
- Volume guidance:
- FY27 → ~400,000 tonnes
- FY28 → ~475,000 to 500,000 tonnes
- Weighted average cost per tonne of production expected to reduce by ₹1,500–2,000 due to logistics advantage, once the stabilisation period is over for expanded capacities.
8. Other Observations
- Started producing niche ferrochrome with Max phosphorus 0.15% and Max silicon 1.5%, that has a premium of ~25%. Currently selling to specific customers in Japan (likely small quantities).
- Current mix of 90% exports to shift to 60% exports & 40% domestic.