Indian Metals & Ferro Alloys Shares Plunge Over 12%, Is Global Supply Pressure To Blame?

Mumbai: Shares of Indian Metals and Ferro Alloys Ltd. (IMFA) fell sharply on Tuesday, January 6, dropping as much as 12 percent in a single day. This marks the biggest single-day decline for the stock since January last year and comes after losses in three of the last four sessions. On Tuesday, shares traded 8.3 percent lower at Rs 1,337, hitting an intraday low of Rs 1,217.

Global Supply Concerns

Investors are concerned about developments in South Africa, a key supplier of ferrochrome globally. Reports suggest that South Africa’s electricity regulator, NERSA, is fast-tracking an application from Eskom, the state-owned power utility. Eskom has requested a temporary reduction in the NPA tariff for 2026.

In the past, major producers such as Samancor and Glencore-Merafe had declared hardship under their NPAs due to high electricity costs, which make their ferrochrome production globally uncompetitive. Electricity costs alone account for 35-40 percent of ferrochrome production. If tariff relief is approved, some smelters could restart production, increasing global supply and potentially putting downward pressure on prices.

Domestic Price Pressure

Closer to home, domestic ferrochrome prices have also cooled. Prices have fallen from a recent peak of Rs 1.2 lakh per tonne to around Rs 1.05 lakh per tonne. The combination of potential global oversupply and cooling domestic prices is creating a negative sentiment around IMFA’s stock.

Investor Sentiment

The sharp fall in IMFA shares reflects both global and domestic pressures. Market watchers are cautious about the stock as higher supply from South Africa could impact global prices, while domestic prices have also weakened. Investors are closely monitoring developments in the ferrochrome market to assess future price trends and stock performance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Stock market investments are subject to risks. Please consult a qualified financial advisor before investing.