GLOBAL CHROME WRAP: Chinese ore, alloy prices lose up to 35% after mills slash tenders

Chrome ore and ferro-chrome prices dropped by up to 35% in China on Friday May 12 after domestic stainless steel mills slashed tender prices for May.

  • Chrome ore prices drop by 34.6% in China
  • Chinese domestic spot ferro-chrome prices drop 20%
  • Ore buyers walk away from some inbound cargoes
  • Alloy prices slide in Japan and Europe
  • Alloy prices hold in South Korea and USA
Metal Bulletin’s UG2 chrome ore index, cif China, dropped to $151 per tonne, down 34.6% from May 5. 
 
Metal Bulletin’s price quotation for Turkish lumpy chrome ore, cfr China dropped 30% week-on-week to $240-250 per tonne.

Market sources reported that some chrome ore buyers in China have started to walk away from cargoes they bought at higher prices in recent weeks, due to the subsequent drop in value. 

Metal Bulletin assessed Chinese contract ferro-chrome prices at 6,900-7,100 yuan per tonne, in line with May tender prices released by two major mills. 

Metal Bulletin’s price quotation for domestic spot ferro-chrome also dropped to 6,900-7,100 yuan per tonne, in warehouse China, down 20% compared with the previous week.

The new contract and spot ferro-chrome price ranges are equivalent to about 77-80 cents per lb.

Most market participants said they anticipated further price drops on both ore and alloy, citing high raw material inventories and poor demand from the stainless steel sector.

“It will be hard to say UG2 prices have touched the floor before inventories wind down. And the downward ferro-chrome trend will be also weighing on chrome ore prices,” a major ore trader told Metal Bulletin.

A gap persists between Chinese domestic ferro-chrome prices and imported ferro-chrome prices, leading to a stand-off between international ferro-chrome suppliers and their customers in China.

While ferro-chrome suppliers outside China have said in recent weeks that they are under less pressure to cut their Chinese than Chinese domestic mills are, import prices are edging lower. 

Metal Bulletin’s charge chrome index, cif Shanghai dropped 1 cent to $1.11 per lb.

“One side will give up; I think sooner or later the seller will concede to Chinese mills’ tender prices as this is an obviously falling market,” one international ferro-chrome supplier predicted.

Elsewhere in Asia, ferro-chrome prices were also under downward pressure in Japan, while trading remained thin in South Korea. 

Metal Bulletin’s price quotation for spot high-carbon ferro-chrome, cif Japan dropped 3 cents at each end of its trading range on Thursday May 11, settling at $1.1-1.17 per lb. 
 
Prices for high-carbon ferro-chrome, cif South Korea held at $1.1-1.15 per lb on Thursday. 

Europe braces for lower prices, USA spooked
In Europe, prices edged lower as market participants braced for further weakness in response to the sharp falls in China. 

High-carbon ferro-chrome prices fell 2 cents at the high end to $1.30-1.42 per lb on a delivered basis.

“I’m holding off buying in the spot ferro-chrome market and see what the impact will be from the markets in China,” a consumer in Europe told Metal Bulletin.

Spot enquiries have been for small volumes as most consumers remained covered on long-term contracts, according to a supplier source who added that the ferro-chrome market is better balanced in Europe than in China.

“The main consumers are covered for the time being and the transactions are rather limited to small lots,” the source told Metal Bulletin.

“Irrespective of expected downward price movements in China, supply and demand remain balanced in Europe,” the source added.

In the USA, spot prices for high-carbon ferro-chrome held at $1.42-1.49 per lb in warehouse Pittsburgh on May 11, according to Metal Bulletin sister publication AMM’s latest assessment.

The US market has been spooked by weakness in China and spot activity has been limited to small, sporadic transactions.

“It’s definitely a little scary what is happening overseas, and we have seen a slowing of enquiries this week,” a supplier source in the USA told AMM.

But others said they believe recent uncertainty will limit scope for downside as it has been discouraging imports, keeping supply tight.

“Everyone is still reluctant to bring material in and that is still creating significant tightness,” a second market source told Metal Bulletin.

The latest developments in the Chinese chrome ore and Chinese ferro-chrome markets will exacerbate that effect, sources added.

“Traders have not been willing to stick their necks out and now those fears are only going to be further entrenched,” the first supplier source explained.

Despite, the uncertainty, US suppliers were keen to point out that theirs is the market where stainless steel demand remains robust.

“We see prices staying where they are for a while because demand is still great, and no one is long,” a third supplier source told AMM.

“We are expecting most mills to come back in even longer contracts for the second half and third quarter,” the source said.

Metal Bulletin chrome ore, ferro-chrome prices

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