GLOBAL CHROME WRAP: Alloy prices weaken in China; lower November tenders expected

Reduced trading has pushed ferro-chrome prices in China downward, although chrome ore has rallied slightly, while the price range in Europe has narrowed and prices in the USA have resisted the drag of slower trading.

  • Ferro-chrome prices weaken in China
  • Lower ferro-chrome tender prices expected for November
  • Chrome ore prices edge up in China
  • Alloy prices flatline in Asia, USA
  • European alloy prices trade in narrower range

Ferro-chrome prices dip in China
Ferro-chrome prices in China fell on Friday October 20 amid thin trading and predictions of lower November ferro-chrome tender prices from the country’s stainless steel mills.

Metal Bulletin’s price assessment for Chinese spot domestic ferro-chrome dropped on Friday to 7,900-8,100 yuan ($1,193-1,223) per tonne, down from 8,000-8,300 yuan per tonne previously.

The spot Chinese domestic ferro-chrome price is equivalent to $0.92-0.95 per lb.

Stainless steel mills have less demand for ferro-chrome in November, while increased supply from overseas is putting further downward pressure on prices.

“Some Chinese stainless steel mills are planning maintenance [outages] at the end of October or into November, amid weaker demand. Also, some Northern Chinese stainless steel mills have been ordered to cut production to [help to] control air quality,” a Shanghai-based ferro-chrome analyst told Metal Bulletin.

The end of the winter power tariff period in South Africa has prompted increased ferro-chrome supplies to China, a ferro-chrome trader said.

“The end of the expensive winter power tariff period […] means that alloy supply from South Africa is increasing. The market is cautious about the possible drop in ferro-chrome tender prices from stainless steel mills in November,” the trader added.

Metal Bulletin’s charge chrome index, cif Shanghai, dropped by $0.01 to $1.00 per lb cif China.

Some market sources expect November ferro-chrome tender prices from Chinese mills to be in the range of 8,000-8,200 yuan per tonne, down by 200 yuan from October’s price, while others predicted prices as low as 7,800-8,000 yuan per tonne.

Metal Bulletin’s latest price assessment for Chinese domestic high-carbon ferro-chrome on contracts rolled over at 8,200-8,400 yuan per tonne on October 20, based on tender prices for October from major Chinese stainless steel mills.

Such pessimism has yet to filter through to the ore market, where demand from domestic ferro-chrome smelters in China remains robust, despite the expected production cuts and offers from miners holding firm.

Chrome ore prices rally
Metal Bulletin’s UG2 chrome ore index, cif China, edged upward to $223 per tonne cif China, from $220 per tonne the previous week. But this was still lower than early September’s $225 per tonne.

“UG2 prices are higher due to miners’ aggressive [price] offers and while demand from China remains robust due to higher operating rates at Chinese ferro-chrome producers,” a chrome ore trader in Shanghai told Metal Bulletin.

Elsewhere in Asia, prices held steady while most Indian suppliers celebrated the Diwali religious festival, leaving thin spot trading in Japan and South Korea.

Metal Bulletin’s price assessment for high carbon ferro-chrome, cif Japan, was flat at $1.00-1.05 per lb on October 19.

“Prices and demand are stable here and I am quoting $1.03 per lb. Most of my customers are living on long-term contracts and I have not concluded any spot deals over the past week,” a Japanese trader told Metal Bulletin.

Metal Bulletin’s price assessment for high carbon ferro-chrome, cif South Korea, held steady at $1.01-1.04 per lb.

Traders remained on the market sidelines despite a couple of tenders from local steel mills continuing into the week.

“I’ve received an offer at about $1.02 [per lb]. However, I haven’t taken it. I would like to check how everything goes before I take action,” a trader told Metal Bulletin.

Europe price range narrows
In Europe, the trading range on spot prices narrowed dramatically as consumers appear to be satisfied with their long-term delivery settlements.

Suppliers, meanwhile, have been reluctant to cut their offer prices amid robust stainless steel production.

Metal Bulletin’s price assessment for high carbon ferro-chrome, delivered in Europe, narrowed to $1.25-1.35 per lb, down by $0.11 at the top end.

Data points relating to 350 tonnes of confirmed high-carbon ferro-chrome business were reported to Metal Bulletin in the range $1.25-1.30 per lb.

Much will depend on steelmakers being able to pass on the cost of the higher fourth-quarter benchmark price to their customers in the alloy surcharges in November, sources said.

The effect of the rise in the benchmark price on November’s alloy surcharge may be partly mitigated by the lower average nickel prices heard so far in the monthly surcharge calculation period.

Slower trading but firm prices in USA
Prices held firm in the USA as spot trading activity slowed.

Spot prices for high-carbon ferro-chrome, in-warehouse Pittsburgh, held at $1.42-1.48 per lb on October 19, according to the latest assessment by Metal Bulletin sister publication AMM.

Some market participants have suggested that lower-priced imports of India-origin high-carbon ferro-chrome pose a threat to pricing, while others continued to dismiss this notion.

“The lower quality Indian material has been available here for a while, and it has almost no effect on the price level in the USA,” a second supplier source said.

“If you need high-quality ferro-chrome, you are going to have to pay these prices,” he added.

After a slow first quarter, marked by minimal tonnages, US imports of India-origin material totalled 13,128 tonnes from April to August.

Because supply remains well-controlled in the USA, market participants believe that there will be little change in prices in the near future.

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