GLOBAL CHROME WRAP: Chinese domestic market slides on stainless downturn; charge chrome, UG2 prices continue upward run

Chinese spot domestic ferro-chrome prices continued to weaken last week amid lower stainless steel and nickel prices, yet the outlook for October tender prices remains positive. Meanwhile, charge chrome and UG2 cif China prices edged up due to the tight supply of South African material and limited transportation capacity at ports in the country.

  • Chinese alloy prices ease on lower nickel, stainless steel prices
  • South African charge chrome import prices edge higher on tight supply
  • Chrome ore prices rise on lower inventory, higher Chinese FeCr output
  • European market strengthens amid firmer demand
  • US market stable despite dormant spot demand

China’s domestic alloy spot price dips while import price edges higher
Metal Bulletin’s price quotation for spot Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) dropped to 8,400-8,600 yuan ($1,282.81-1,313.34) per tonne on Friday September 15, down from 8,600-8,700 yuan per tonne previously.

The domestic spot price is equal to $99-1.02 per lb, down from the previous week’s $1.04-1.05 per lb.

“The spot ferro-chrome price has been dragged down by lower stainless steel prices and falling nickel prices over the past week,” A Shanghai-based ferro-chrome trader told Metal Bulletin.

China’s domestic stainless steel prices fell during the week ended September 14, the first decline since early August, with traders becoming increasingly eager to offload their material amid inventory pressure, Metal Bulletin has reported.

Metal Bulletin’s assessment for benchmark 304 stainless cold rolled coil prices was 16,400-16,900 yuan per tonne, including VAT, in the major market of Wuxi for the week ended September 14, down from 16,800-17,200 yuan per tonne a week earlier.

The London Metal Exchange three-month nickel price continued to retreat over the past week, closing at $11,125 per tonne on September 15, down from a closing price of $11,505 per tonne seven days earlier, and much lower than the multi-year high of $12,380 per tonne reached on September 4.

“The stainless steel sector’s fading bullish trend amid falling nickel prices is weighing on Chinese spot ferro-chrome prices,” a second ferro-chrome trader said.

Metal Bulletin’s price quotation for contract prices of Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) was flat at 8,300-8,500 yuan per tonne in the past week, with no new ferro-chrome tender prices released by major stainless steel mills.

The contract price equals 98-100.5 cents.

However, “the downward momentum in ferro-chrome prices was offset by expectations of continued supply tightness in September and October. The market still expects a flat or slightly higher ferro-chrome tender price from major Chinese stainless steel mills for October,” the second trader said.

“Tight ferro-chrome supply from South Africa and limited transportation capacity at the port in Durban are the main reasons for the slight supply deficit in China’s ferro-chrome market during September and October,” a major ferro-chrome importer said.

Major Chinese stainless steel mills are expected to announce their October ferro-chrome tender price in the final week of September, before China’s National Day Golden Week holiday.

“Imported ferro-chrome traded very thinly over the past week on fading buying interest. The Chinese market waits for further direction, while South African suppliers are aggressively holding onto cargoes due to their limited supply,” a ferro-chrome buyer from a major Chinese stainless steel mill told Metal Bulletin.

Metal Bulletin’s charge chrome index, which tracks South African imports to China, rose to $1.07 per lb cif Shanghai on September 15, up 2 cents from the previous week’s $1.05 per lb.

“China’s increased production of ferro-chrome and the limited transport capacity in South Africa have both lent support to UG2 prices,” a major chrome ore imported said.

“UG2 demand is currently good due to the strong profit margins for Chinese domestic ferro-chrome production. September’s ferro-chrome output will surely be higher than that of August as some environmental inspections have ended,” a second chrome ore importer said.

“Chrome ore inventories at Chinese ports are decreasing,” the second chrome ore importer added.

Metal Bulletin’s UG2 chrome ore index, cif China, climbed to $236 per tonne on September 15, up $5 from previously.

Meanwhile, Turkish lumpy chrome ore prices were unchanged over the past week, holding firm at $340-360 per tonne.

European market climbs as demand firms
The European high-carbon ferro-chrome market climbed in the past week, with Metal Bulletin’s latest assessed price at $1.25-1.38 per lb on September 15, up from $1.15-1.25 per lb a week earlier, on reported higher deals amid steady demand.

The European market is now around a level last seen in May this year, but some way off an annual peak of $1.40-1.55 per lb seen in early January.

One supplier reported doing deals for about 125 tonnes at $1.31-1.38 per lb, with others saying that market offers are as low as $1.25 per lb.

Sources said there was industry talk that China may step up environmental checks at domestic ferro-chrome plants in the near term, which is expected to increase import demand for charge chrome and ferro-chrome in the country, while potentially knocking demand for chrome ore.

US spot market remains firm despite dormant demand

The US high-carbon ferro-chrome held firm despite a lack of consistent spot market demand.

Spot prices for US high-carbon ferro-chrome held firm at $1.42-1.50 per lb on September 14, unchanged from the previous week, according to Metal Bulletin sister publication AMM’s latest assessment.

Although spot market demand has been somewhat limited, suppliers noted several sales within the established price range as prices remained firm.

As has been the case for several months, the tight, consolidated spot supply has kept prices from slipping.

Meanwhile, the recent run on overseas prices has market participants expecting the trend to continue through fourth quarter negotiations, perhaps with prices strengthening from current levels.

“At this point it is clear that there certainly won’t be any downward correction. More than that, there is a chance we could actually see prices moving up from here as prices garner further support from overseas markets,” a supplier source told AMM.