Chrome ore prices renegotiated by 13.7% in plummeting market

Agreed prices for South African chrome ore shipments have been reduced by as much as 13.7% in recent weeks as sharp price drops spark renegotiations.

Agreed prices for South African chrome ore shipments have been reduced by as much as 13.7% in recent weeks as sharp price drops spark renegotiations.

At least one cargo of South African UG2 chrome ore was renegotiated to $125 per tonne from an initial price of $145 per tonne, Metal Bulletin understands.

Metal Bulletin’s price quotation for UG2 fell to $128-138 per tonne, cif China on Friday October 30.

Previously, the price had dropped to $145-153 per tonne on September 18 and $140-148 per tonne on September 25.

By October 9, the price was already as low as $138-143 per tonne.

There have also been unconfirmed reports of suppliers dropping their prices to $120 per tonne.

“The prices requested in renegotiations have been $120-125. I talked to people who confirmed $125 per tonne and mentioned a range of $123-127 per tonne,” a market source told Metal Bulletin.

Metal Bulletin reported on November 4 that chrome ore buyers in China have been forcing late-stage price negotiations or walking away from cargoes as they struggle to open letters of credit (LCs) due to the sharp price drops.

Buyers have either failed or refused to open LCs to pay for material priced at levels that are no longer representative of the market, or have forced suppliers to agree to reduce agreed prices.

“We’re not selling that low yet, but we are expecting it to drop; UG2 producers are pushing the price down,” a trader told Metal Bulletin.

“Credit is an issue in China at the moment and it’s not limited to our sector. I am hearing stuff from base metals markets that demand is there but opening LCs is a problem. We are treading carefully,” the trader added.

The renegotiations are also affecting Turkish lumpy chrome ore (40-42% Cr), which dropped to $180-183 per tonne cif China on October 30, down from $188-193 previously.

Janie Davies
jdavies@metalbulletin.com
Twitter: @janiedavies_mb

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