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Ferro-alloy pricing trends have generally diverged ove the past month, depending on the security of the supply-side position of the market. With most supply concerns fading with the resumption of industrial activity in China, reflecting the country’s position as the world’s largest producer of most alloys, Fastmarkets’ research team have seen ferro-alloy prices retreating.

The exception to the downward pricing trend remains those markets most affected by the South African lockdown, namely manganese ore and alloy, chrome and vanadium. All of these have shown stable to higher pricing over the past month.

With countries around the world in lockdown over the month, there has been little change in our forecast view. Industrial activity is slowly improving in China, whereas the rest of the world is now debating how to emerge from the lockdown and revive industries while still preventing the further spread of Covid-19.

We believe that construction activity will lead the steel and alloy industries out of the crisis, with automotive and manufacturing activity somewhat slower to resume.

As had been widely expected, the Covid-19 lockdown of South African mining and smelting assets resulted in a surge in both manganese ore and alloy prices over the past month.

We expect to see European and US manganese alloy prices struggle somewhat in the near term, with demand faltering in response to significant steel production cuts in both regions, offsetting higher ore prices.

In China, however, we expect to see stable to higher pricing, reflecting both manganese ore supply concerns, as well as maintained steel production, and most notably, steel rebar output.

We expect to see Chinese government infrastructure investment to support rebar production and, in turn, silico-manganese consumption in the coming months.

Prices of some chrome materials increased with the South African lockdown, primarily for chrome ore, but the current run-up is likely to be limited. Stocks of chrome ore and ferro-chrome remain high in China and, indeed, it is only really China where consumption appears to be picking up again.

A pick-up in ferro-chrome pricing in Europe during late March was short-lived, but the apparent short-term tightness in supply enabled ferro-chrome smelters to achieve an increase in quarterly contract prices.

Charge chrome contract prices will rise to $1.14 per lb for the second quarter, up from $1.01 per lb during January-March.

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