GLOBAL CHROME WRAP: Domestic alloy prices hold in China, UG2 prices inch higher

Chinese domestic ferro-chrome prices held for the first time in nine weeks on Friday May 26 amid thin trading, as market participants awaited buying signals from mills.

  • Chinese domestic ferro-chrome prices hold
  • Imported charge chrome prices continue to slide
  • Turkish chrome ore holds as UG2 strengthens slightly
  • Alloy prices fall in Europe
  • Trading range widens in USA

Metal Bulletin’s price quotation for Chinese domestic spot ferro-chrome, delivered duty paid held at 6,600-6,900 yuan ($962-1,006) per tonne, equal to 74-77 cents per lb.

Stainless steel mills are expected to announce lower monthly ferro-chrome tender prices for June, due to weakness in their own sector, market sources said.

In recent months, major mills have been postponing monthly tender announcements or not announcing bid prices at all.

Two major mills told Metal Bulletin they would not be interested in purchasing ferro-chrome at prices above 6,000-6,100 yuan per tonne.

Stainless steel output is high, despite poor prices, because no mill wants to be the first to give up market share, a ferro-chrome buyer at a third mill told Metal Bulletin.

“The stainless steel sector is very weak. It is difficult to sell stainless steel but capacity is huge; everyone wants to push their opponent out of the market, but no one wants to leave,” the buyer said.

Contract prices for domestic Chinese ferro-chrome held at 6,900-7,100 yuan per tonne.

Charge chrome import prices continued to fall but the pace of decline slowed week-on-week.

Metal Bulletin’s charge chrome index, cif Shanghai
fell 5 cents to 81 cents per lb.

South African ferro-chrome producers have been offering at 80-85 cents per lb, while Chinese mills have been bidding up to 10 cents lower.

The lowest bids have been rejected by South African producers, amid warnings that the stronger South African rand and the imminent onset of the country’s expensive winter power tariff preclude further price drops.

“South Africa is entering the winter months with a strong rand and producers there will have to make tough decisions,” a supplier source told Metal Bulletin.

“Producers may prefer to cut production than supply at ridiculously cheap prices,” the source added.

Chrome ore prices showed signs of stability and even some strength after weeks of sharp drops.

Metal Bulletin’s UG2 chrome ore index, cif China rose $4 to $147 per lb.

Metal Bulletin’s price quotation for Turkish lumpy chrome ore (40-42%), cfr China
held at $220-240 per tonne.

Still, a number of low bids and offers were also reported, leaving many market participants braced for further weakness.

Elsewhere in Asia, high-carbon ferro-chrome prices fell in both Japan and South Korea on Thursday May 25.

Metal Bulletin’s price quotation for high-carbon ferro-chrome, cif Japan
dropped to $1.00-1.07 per lb compared with $1.05-1.10 a week earlier.

While, prices for high-carbon ferro-chrome, cif South Korea fell to $0.95-1.00 per lb, down from $1.01-1.05 per lb a week ago.

Buyers are requesting offers but stopping short of releasing bids and signing deals in the spot market, as they expect the prices to drop further, sources said.

“This is a tactic used by buyers; they will buy only what they need for current positions and will not take any long positions,” a producer source told Metal Bulletin.

An Indian producer source reported that some South Korean buyers have either reduced the quantity that they are buying in the spot market or have requested to defer some of their June shipments.

Offers for Indian material were reported at $1-1.02 per lb, cif Japan, but no deals were reported.

“We won’t buy as customers don’t have any interest at this level as they are expecting prices to fall further,” a Japanese trader told Metal Bulletin.

A trader in South Korea reporting taking a similar approach.

“We were collecting some offers from India; we haven't bought in two weeks as the price is getting softer,” the South Korean trader said.

In Europe, limited spot demand and the recent drops in chrome ore prices weighed on alloy prices.

High-carbon ferro-chrome prices in Europe
dropped 5 cents at the each end of its trading range to $1.25-1.35 per lb, delivered on May 26, according to Metal Bulletin’s latest assessment.

Sources said stainless mills have sufficient stocks of ferro-alloys at present, but are expected to return to the markets in the coming weeks.

In the USA, the trading range for high-carbon ferro-chrome, in warehouse Pittsburgh widened to $1.41-$1.48 per lb on May 25, from $1.42-$1.47 per lb a week earlier, according to Metal Bulletin sister publication AMM’s latest assessment.

Spot activity remains subdued as the market awaits upcoming third quarter negotiations.

“Contract demand has continued to be great, but spot demand has remained quiet,” a supplier source told AMM.

While pressure on pricing exists outside the USA, market participants noted activity would need to pick up before there will be any clarity on the price direction in the near term.

“The market should start to pick up after the [late May] public holidays. We should start to see some more mills coming out at that point for third quarter and second half requirements,” a second supplier source told AMM.

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