GLOBAL CHROME WRAP: Chinese market rebounds as European spot and benchmark prices drop

Chrome ore and ferro-chrome prices jumped in China on Friday June 23 while European spot prices moved lower, with the regional quarterly benchmark falling 29%.

  • Ore and alloy prices leap in China
  • Spot and benchmark alloy prices drop in Europe
  • Japan and South Korea pause 
  • South African producers close furnaces as earlier supply cuts in China bite

Metal Bulletin’s UG2 chrome ore index cif China rose 18.8% to $164 per tonne.

South African producers raised their offer prices and reported several large-volume deals at $160-165 per tonne.

Metal Bulletin’s price quotation for Turkish lumpy chrome ore cfr China rose $5 at each end of the trading range to $235-255 per tonne.

Spot prices for domestic and imported ferro-chrome both rose, reflecting a strengthening of the stainless steel market and after South African producers cut production due to high costs and low prices recently.

Chinese ferro-chrome smelters have been cutting production since May amid warnings that large portions of capacity have become loss-making.

Metal Bulletin’s charge chrome index cif Shanghai rose 5.6% to 75 cents per lb.

There were signs on Friday that the intermittent stand-off between South African producers and Chinese mills could soon be back on. South African producers said they could easily sell above the index price and a mill source said offers above 73 cents would not be accepted.

Metal Bulletin’s price quotation for spot domestic Chinese ferro-chrome delivered duty paid rose to 6,500-7,000 yuan per tonne, up from 5,700-6,200 yuan per tonne the previous week. The domestic spot price is equal to 73-79 cents per lb.

Market participants acknowledged the uptick but warned it may not last long.

“We had heard deals done at 7,000 yuan per tonne including delivery by Friday. The strong rebound seems have turned sentiment but I will remain cautious,” a major Chinese ferro-chrome producer told Metal Bulletin.

“It will take time before we see proof that stainless steel demand has really picked up,” the source producer added.

Metal Bulletin’s price quotation for domestic Chinese ferro-chrome on contracts held at 5,300-6,300 yuan per tonne duty paid after major stainless steel mills released tender prices in that range.

The recent strength of the spot price has led to predictions of higher tender prices in July, which would mark the first increase in contract prices since March.

“The July tender prices from Chinese stainless steel mills surely will go up. The rising trend has been established but tender prices won’t be released too early in July; maybe mid- or late July,” a ferro-chrome buyer at a leading Chinese mill told Metal Bulletin.

Elsewhere in Asia, markets that had been heavily exposed to low prices in China in recent months paused following the change in direction.

The price rally in China prompted some buyers in Japan and South Korea to speed up their purchasing in case the moves in China spread to their own markets.

But others remained on the sidelines ahead of the European benchmark announcement, which precedes the Japanese benchmark settlement by a couple of weeks.

Metal Bulletin’s price quotation for spot high-carbon ferro-chrome cif Japan was stable at $0.85-0.90 per lb on Thursday June 22.

“We heard some users have just started to look for cheap offers, which means the price may have hit bottom,” a Japanese trader said.

Metal Bulletin’s price quotation for spot high carbon ferro-chrome cif South Korea held at $0.80-0.85 per lb.

“I feel offers from Indian suppliers are strengthening this week, although there’s no big deals being heard in the market,” a major trader in Seoul told Metal Bulletin.

The European market, which has been gradually weakening but lagging behind the Chinese market, took a serious knock. The quarterly benchmark price, which is usually inflated due to its associated discounts, dropped below spot prices.

The ferro-chrome benchmark price for the third quarter came in at $1.10 per lb, down from $1.54 per lb for the second quarter.

Metal Bulletin’s price quotation for spot high carbon ferro-chrome delivered in Europe dropped to $1.12-1.18 per lb, down 3 cents at each end of the trading range.

The US high-carbon ferro-chrome market was stable again last week – prices continue to hold up in light of pressure from overseas markets.

Spot prices for US high-carbon ferro-chrome at $1.40-1.45 per lb on June 22 was unchanged from the prior week, according to Metal Bulletin sister publication AMM’s latest assessment.

Market participants continued to attribute the resilient price level to tightly controlled supply in the US market.

“The supply chains in the states are a lot thinner as far as raw material goes, so the producers are really controlling what’s going on,” a supplier source told AMM.

“The Turkish and Kazakh material isn’t being sold cheaply and, if anyone has any Albanian material in stock, it is high priced,” a second supplier source said. “There isn’t much else around right now, so the USA hasn’t seen the same downturn as elsewhere.”

Despite lower prices in the global markets and a lower-than-expected European benchmark, US prices are expected to remain elevated in the near term.

“The bench is definitely much lower, but I’m not sure it will change anything in the US right away,” a third supplier source said. “The market is still tightly controlled and current inventories are high priced.”

While market participants expect pricing to correct downward, the weakness has yet to manifest in the USA.

“Forward pricing is coming down a bit but anything prompt is holding up,” a fourth supplier source said. “Pricing will come down but how far and how fast is still a big question.”