Chinese ferro-chrome prices tick up for the first time since March

Spot ferro-chrome prices in China rose for the first time since March, with improved demand and sentiment after new power cuts were imposed in Inner Mongolia.

Fastmarkets’ price assessment for ferro-chrome, spot, 6-8% C, basis 50% Cr, ddp China was 7,300-7,600 yuan ($1,135.62-1,182.29) per tonne on Tuesday May 19, up by 100 yuan (1.4%) from 7,200-7,500 yuan per tonne the preceding week.

Prior to the turning point, the assessment for ferro-chrome had dropped by 1,600 yuan (17.88%) after it peaked at 8,800-9,100 yuan per tonne on March 5. The sliding market was capped after smelters reported increased inquiries for material.

“Suppliers including trading houses and smelters had agreed to supply mills with an amount of material greater than they actually have at hand because of the high tender prices for the previous three months. And with the deadline of delivery approaching, they are looking for material from the spot market,” a trader source said.

Adding to this, the news of a fresh wave of power cuts in the production hub has propelled sentiment higher, resulting in higher offer prices from suppliers in the spot market.

That said, the estimated loss of 20,000 tonnes of ferro-chrome output in the city of Baotou is expected to have a limited impact given production elsewhere is picking up, participants told Fastmarkets.

“Smelters in Shanxi, Sichuan, Guangxi, Hunan [provinces] are running at full capacities, with new furnaces starting this month. Hence the total output in May will most likely exceed that in April even though there are new production cuts in Inner Mongolia,” a ferro-chrome producer said.

In the meantime, the market for imported charge chrome ferro-chrome was stable with consumers digesting the impact of electricity restrictions in Inner Mongolia.

Fastmarkets’ price assessment of ferro-chrome 50% Cr import, cif main Chinese ports held steady at $0.94 per lb, unchanged from the previous week.

“The power restrictions should help increase the [import] ferro-chrome price,” a second trader said.

The electricity restrictions on the charge chrome market had not resulted in higher transactions prices reported to Fastmarkets, although it was having a supportive impact on prices, according to sources.

“Domestic spot and imported ferro-chrome prices in Inner Mongolia are rising and this is supporting our market – but there are no transactions,” a second ferro-chrome producer said. “We are in the mid-month lull so consumers don’t want to buy until the next tender prices are released.”

UG2 chrome ore price up again
The market for UG2 chrome ore rose in response to producers raising their offer prices and despite the power restrictions in Inner Mongolia.

Fastmarkets’ chrome ore South Africa UG2 concentrates index basis 42%, cif China rose by $3 per tonne (2.0%) to $153 per tonne on May 18, from $150 per tonne a week earlier.

South African UG2 producers have increased their offer prices in response to high ocean freight and internal logistics.

“We don’t have appetite to sell huge volumes at these levels but there is cost support to keep pushing prices up,” the producer said.

But consumers have not yet accepted the higher offers because their buying interest is being curbed by stubbornly high inventories at ports.

Fastmarkets’ chrome ore inventories at the main ports of Tianjin, Qinzhou, Lianyungang and Shanghai rose by 6.8% to 3.38-3.68 million tonnes on Monday May 17, from 3.12-3.49 million tonnes the week earlier.

“Only when stocks show a steady decline will we see buyers willing to accept higher prices in the seaborne market,” a chrome ore buyer said.

Nevertheless, sellers’ resistance to succumb to any lower prices and logistics issues have caused some concerns over the arrival of material in the next few months, which encouraged some buyers to procure immediate material from the port markets, where UG2 chrome ore was traded at around 27.50 yuan per dry metric tonne unit (dmtu), a rise of 0.5-1.00 yuan from the preceding week, according to market participants.

“The port market is more active [compared with the seaborne market],” a third trader source said. “Some buyers are looking to build up some stocks in case seaborne prices rise further in the following weeks.”