European FeCr benchmark drops back to Q1 level

The European charge and high-carbon ferro-chrome benchmark for the third quarter of 2022 has slumped by 16.7% from the previous quarter’s settlement to $1.80 per lb

From the first quarter to the second quarter, the benchmark jumped 36 cents, or 20%, to $2.16 per lb, but has now dropped back to levels seen in both the fourth quarter of 2021 and the first quarter of 2022.

The settlement is announced on a quarterly basis, with the third-quarter figure confirmed by Merafe Resources on Thursday June 30. Merafe Resources operates a chrome joint venture with Glencore in South Africa.

Fastmarkets’ ferro-chrome lumpy Cr charge quarterly, basis 52% Cr (and high carbon), delivered Europe (rounded to the closest 2 decimal places) is a forward-looking price covering the next quarter.

In the second quarter, in the wake of Russia’s unprovoked invasion of Ukraine, the benchmark saw a major spike upward, in line with the rapid rise of spot prices in the European high carbon ferro-chrome market.

Spot markets in both Europe and China have softened in recent weeks, however, with persistent declines in monthly ferro-chrome tender prices in China weighing on the market there, while Europe has seen the flurry of buying activity that occurred in the immediate aftermath of the invasion begin to fade.

The benchmark is settled through negotiations between a major South African ferro-chrome producer and a leading European stainless-steel mill - usually Glencore and Luxembourg-based mill Aperam.

Fastmarkets’ weekly price assessment for ferro-chrome high carbon 6-8.5% C, basis 65-70% Cr, max 1.5% Si, delivered Europe declined further as of 28 June, falling to $3-3.15 per lb, from $3-3.40 previously.

Market participants on both the buy and sell side in Europe have said the traditional summer lull - the period during which participants take annual leave and plants undertake maintenance - has set in, along with limited demand as buyers look to consume existing stocks before coming back to the spot market.

But issues such as energy prices, logistics costs, inflationary pressures and the ongoing impact of international sanctions on Russia may limit the downside, sources have said.

Fastmarkets’ ferro-chrome lumpy Cr benchmark indicator, charge basis 52% (and high carbon), Europe was $2.12 per lb on June 28.

The indicator forecasts the benchmark at any given point, as if it had been settled that day.

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