GLOBAL CHROME WRAP: Asian alloy prices bolstered by improved sentiment

Asian ferro-chrome prices have risen due to continuing robust demand from the stainless steel industry as well as the continued strength in raw material costs.

Chinese high-carbon ferro-chrome spot price is still rising
The spot price of Chinese domestic high-carbon ferro-chrome, 6-8% C, basis 50% Cr, delivered duty paid, was assessed at 10,300-10,700 yuan ($1,499-1,558) per tonne on Friday March 24, up 5% from last week’s 9,700-10,300 yuan per tonne.

Demand from the Chinese stainless steel sector remains strong as production has declined in some high-carbon ferro-chrome hubs, such as Hunan, Guizhou and Sichuan provinces.

Moreover, market participants noted strong expectations of a higher tender price from stainless steel mills in April, which has lent support to domestic high-carbon ferro-chrome spot prices.

Metal Bulletin’s Chinese import charge chrome index, cif Shanghai, strengthened to $1.17 per lb on Friday, up 2.6% from $1.14 per lb previously. 

Suppliers reported chrome prices at $1.16-1.18 per lb, as they attempt to push imported charge chrome prices in line with the Chinese domestic ferro-chrome spot price.

In addition to stronger domestic prices, suppliers noted that they have raised prices as low Chinese mill tender prices have caused the public to lose trust in the tender prices themselves.

Over the course of the stand-off between Chinese stainless steel mills and import suppliers that began at the end of last year, mill tender prices have lost public confidence, as market participants became aware that many mills actually have paid premiums on their tender prices, sources told Metal Bulletin.

Around three weeks ago, an official at Tsingshan told Metal Bulletin that the steelmaker will not release monthly tender prices from March.

Meanwhile, a considerable increase in Chinese ferro-chrome imports in February will ease some worries of tightened supply of domestic high-carbon ferro-chrome.

China imported 237,500 tonnes of high-carbon ferro-chrome in February, up 10.56% month-on-month and up 53.15% year-on-year.

Total ferro-chrome imports in the first two months of 2017 came to 452,300 tonnes, an increase of 29.37% year-on-year.

High-carbon ferro-chrome prices in both Japan and South Korea have also followed Chinese prices up. Market participants told Metal Bulletin they had noted an increase in offer prices form Indian suppliers, despite limited overall trading activity. 

Metal Bulletin’s South Korean ferro-chrome prices were assessed at $1.15-1.20 per lb, cif South Korea on Thursday March 23, up 4% from $1.11-1.15 per lb previously.

“China’s market is going up; therefore, Indian suppliers also raised their offers to us. This week, many offers have risen to as high as $1.20 [per lb cif South Korea] – it’s too high to accept,” a trader in Seoul said. 

Metal Bulletin assessed cif Japan 60% chrome ferro-chrome prices at $1.17-1.20 per lb on Thursday, up slightly on the low end from $1.16-1.20 per lb a week earlier.

Chrome ore prices maintain strength
The UG2 chrome ore price stayed firm last week, despite limited concluded sales, amid a stand-off between South African sellers and Chinese buyers. 

South African UG2 chrome ore index held at $370 per tonne, cif China, on Friday, unchanged from the previous week.

“The chrome ore price has quietly slid off of highs, but no one found deals lower than $370 per tonne,” a large Chinese buyer of UG2 told Metal Bulletin.

While Chinese ferro-chrome producers try to look for lower chrome ore prices, they are wary of the impact on alloy prices if ore pricing were to correct too far downward.

“Ferro-chrome producers want the chrome ore price slide, but they are scared of chrome price sliding too much,” a trading source told Metal Bulletin.

“If the chrome ore price slides very deeply, stainless steel mills’ tender price won’t go as high as ferro-chrome producers expect,” the trading source added. 

Turkish chrome ore prices strengthened this week, to $400-420 per tonne on Friday, up 3.8% from $380-410 per tonne previously, according to Metal Bulletin.

Cheaper offers in the market dried up, as most sellers were looking to sell at $425-445 per tonne, although very few business deals were transacted.

“There’s still a bit of a stand-off on Turkish lumpy,” a trader source said to Metal Bulletin. “Sellers are looking for $440 in some cases. That’s not realistic if UG2 is at $370.”

“A few weeks back, there were some cheap Turkish sales at a reduced premium to UG2. The Chinese buyers are still looking for that smaller premium, so the stand-off has continued,” the trader source added.

As the ore stand-off has persisted, market participants anticipate strong ferro-chrome prices for the month of April.

“Everyone is now accepting that alloy looks stronger for April,” the trader source added.

“Ore stand-off continues but Chinese are showing signs of being very tight,” a second trader source told Metal Bulletin sister title AMM. “Ferro-chrome prices are quite firm and are expected to go up in April.”

US, Europe ferro-chrome prices hold firm
The US ferro-chrome market has similarly held firm, as a healthy demand and tightened supply have kept prices elevated. 

US spot prices for high-carbon ferro-chrome reached $1.41-$1.49 per lb on Thursday, up marginally on the low end from $1.40-1.49 per lb previously, according to AMM’s latest assessment.

Market participants noted an uptick in spot market activity last week, as the market closes in on the second quarter.

“The spot market actually picked up a little this week, and we took a few more orders than we had been previously,” a supplier source told AMM.

The US market has been supported by a tightened supply amid strong end-user demand to this point in the year.

“I probably sound like a broken record at this point, but contract demand continues to be very strong,” a second supplier source said to AMM. “As a result, the US market has been quite steady.”

“Contract demand has been so strong that we don’t really have a lot of extra material to offer into the spot market,” a third supplier source told AMM. “In some grades, we barely have enough to cover our current contract customers’ demand.”

While the market remains tight, current stocks are dominated by large producers, with traders playing a minimal role in the market.

“The US market is controlled by producers right now. There are not a lot of traders participating right now and that is helping keep price more balanced,” the first US supplier source added. 

European high-carbon ferro-chrome prices remained similarly steady, as prices were assessed at $1.27-1.42 per lb on Friday, unchanged from the previous week.

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