GLOBAL CHROME WRAP: Prices close in on production costs; all regions weaken

Ferro-chrome prices dropped in all global regions that Metal Bulletin assesses on Friday June 9 as producers warned bids from Chinese mills have come uncomfortably close to production costs.

  • Chinese domestic spot prices fall as stainless steel mills cut purchases.
  • South African chrome ore producers warn prices have reached the floor.
  • European and US ferro-chrome prices edge down, although US descent slowed by tight supply.
Metal Bulletin’s price quotation for spot domestic Chinese ferro-chrome, delivered duty paid fell to 5,500-6,000 yuan ($809-883) per tonne on Friday June 9, equal to 62-68 cents per lb, down from last week’s 6,100-6,400 yuan per tonne. 

Stainless steel mills have reduced their ferro-chrome purchase volumes after cutting stainless steel production, but continue to seek limited volumes at low prices, sources said. 

There have been reports of mill having bought domestic ferro-chrome at as low as 5,500 yuan per tonne, but most ferro-chrome smelters say this is lower than their cost of production.

Cargoes secured by mills at prices below 6,000 yuan per tonne would likely be due to the ferro-chrome producer being desperate for cashflow, one domestic ferro-chrome produce told Metal Bulletin.

“We are making losses if stainless steel mills buy lower than 6,000 yuan per tonne,” the ferro-chrome producer said.

“It is difficult for stainless steel mills to purchase at prices lower than 6,000 yuan per tonne unless the ferro-chrome producer wants to liquidate cargoes due to very tight credit in June,” the source added. 

Metal Bulletin’s price quotation for Chinese domestic ferro-chrome on contracts fell to 5,500-6,300 yuan per tonne delivered duty paid on Friday June 9, equal to 68-72 cents per lb. 

This compares with the previous week’s quotation of 6,900-7,100 yuan per tonne, which referred to mills’ tender prices in May.

Import prices also fell, but large South African chrome producers warned that their offer prices have reached a floor.

They said their production cost is rising due to the stronger rand and the more expensive winter power tariff, which kicked in this month.

Metal Bulletin’s charge chrome index, cif Shanghai dropped 10 cents to 70 cents per lb. 

The on-off stand-off between South African ferro-chrome producers and Chinese stainless mills appears to be resuming as the ferro-chrome producers say they will stop selling to China and Chinese mills say they will prioritise cheaper local cargoes.

“Chinese mills want to buy charge chrome below the South African cost of production and we will not agree to that,” a South African ferro-chrome producer source told Metal Bulletin.

“It doesn’t make sense when ferro-chrome producers can sell enough material to Europe, the USA, Japan and South Korea. We are happy selling to other parts of the world,” the source said.

Chrome ore price divergence
South African chrome ore prices continued to slide in China as Turkish lumpy chrome ore prices rose on higher producer offers. 

Metal Bulletin’s UG2 chrome ore index dropped $8 to $140 per tonne, cif China.

Sellers are holding their offers at $140-150 per tonne, saying there is little scope for further downside.

Spot prices for UG2 in Chinese ports held unchanged at about 30-32 yuan per dmtu.

Metal Bulletin’s price quotation for Turkish lumpy chrome ore rose to $230-250 per tonne, up $10 at each end of the trading range. 

Chinese chrome ore port inventory rose 99,000 tonnes week-on-week to 2.47 million tonnes, according to Chinese market data.

Asian prices follow China down
Elsewhere in Asia, spot high-carbon ferro-chrome prices fell further as many buyers retreated to the sidelines after seeing further weakness in China. 

Metal Bulletin’s price quotation for spot high-carbon ferro-chrome, cif Japan dropped to $0.90-1.00 per lb on Thursday June 8, down from $0.98-1.05 the previous week.

“We heard China’s prices have decreased to $0.65 per lb or even lower this week, so prices in Japan and South Korea are still subject to downward pressure,” a trader in Japan said. 

Metal Bulletin’s price quotation for high carbon ferro-chrome, cif South Korea dropped to $0.85-0.9 per lb, down from $0.95-1 per lb the previous week.

“The normal offers we received this week are in the range of $0.85-0.9 per lb. Demand in South Korea is poor, so we haven’t heard any deals so far this week,” a major trader in Seoul told Metal Bulletin.

European, US prices drop
Prices inched lower in Europe amid limited volumes and aggressive offers from buyers. 

Metal Bulletin’s price quotation for high-carbon ferro-chrome, delivered in Europe dropped 2 cents at each end of its trading range to $1.18-1.28 per lb.

Sales of up to 200 tonnes of material were concluded at the low end of the new range, while one deal of less than 100 tonnes was concluded above the previous range.

One European supplier reported sales in the new range and echoed South African producer concerns about low prices in China.

“We are in touch with Chinese buyers, but this year Chinese prices have come down too fast and we’ve decided not to sell at those prices,” the source said.

Prices were also under pressure in the USA, but tight supply and thin trading have kept price falls in check.

Spot prices for high-carbon ferro-chrome, in-warehouse Pittsburgh slipped to $1.37-1.46 per lb on June 8, down from $1.41-$1.46 per lb previously, according to Metal Bulletin sister publication AMM.

“Everyone knows that the prices should be down, but because inventory is fairly limited, prices are being walked down very slowly in comparison to the rest of the world,” a supplier source told AMM.

The spot market was slightly more active during the week but volumes remained thin.

“It was a bit more active last week, but everything is still pretty small, which is helping to slow the downfall a bit on pricing,” a second source told AMM.

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