GLOBAL CHROME WRAP: China chrome markets increase in line with stronger domestic steel sector, shoring up support in other Asian regions
The US market has edged higher on tight supply this past week, while European low-carbon ferro-chrome is up and market sentiment suggests that the rest of the market may soon follow.
• Chinese market buoyed by stainless steel trading
• Steel prices increase in China due to firm demand
• Chrome ore market climbs on expected alloy demand
• European low-carbon ferro-chrome rises, market sentiment up
• US high-carbon ferro-chrome edges higher on tight supply
Chinese high-carbon ferro-chrome spot prices have increased again, in line with higher stainless steel prices and robust demand from the Chinese stainless steel sector. Metal Bulletin’s latest assessed spot price for Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) increased to 7,600-7,800 yuan ($1,140-1,170) per tonne on Friday August 11, up from the previous week’s assessment of 7,200-7,400 yuan per tonne. A price of 7,600-7,800 yuan per tonne is equivalent to about 88-90.5 cents per lb.
Chinese traders said the spot ferro-chrome price in northern China was 7,600-7,800 yuan per tonne delivered, while in the southern and eastern parts of the country offer prices of spot ferro-chrome market have exceeded 8,000 yuan per tonne delivered.
“There is bigger demand from the stainless steel sector but ferro-chrome supply is tight and ferro-chrome production in August has almost been booked out,” a ferro-chrome trader said.
Metal Bulletin’s assessment of prices for benchmark 304 stainless cold rolled coil was 15,000-15,500 yuan per tonne including VAT in the major market of Wuxi for the week ended August 10, up 500-600 yuan per tonne from a week earlier. The market is up 10% month-on-month from early July.
The Chinese domestic stainless steel market has climbed amid sharp increases in nickel prices, Metal Bulletin has reported.
And there has been unexpectedly robust demand in stainless steel in China since late June through to September, a second ferro-chrome trader said. Year on year there has been an increase of 11.3% on Chinese stainless steel production in July, and a month-on-month increase of 7%, according to Chinese stainless steel information provider Custeel. The company reported around 2.17 million tonnes of crude stainless steel production for July.
“Chinese stainless steel production in August and September will be at almost the same level as July’s, although some stainless steel output will be sent to China from Tsingshan Group’s Indonesian capacity, replacing some Chinese domestic production,” one industry source said.
Tsingshan Group’s Indonesian subsidiary has had the capacity to produce 1 million tpy of crude stainless steel since July 8. Market conditions are also affecting the charge chrome market in China – Metal Bulletin’s charge chrome index, cif Shanghai rose five cents to 89 cents per lb on August 11, however offers as high as 90 cents per lb had been heard.
“Chinese stainless steel mills also have increased orders for ferro-chrome in July and August from South Africa,” one Chinese importer said. UG2 cif prices from South Africa have also increased with $180 per tonne deals delivered in September being reported.
South Korea, Japan draws China support
The spot high-carbon ferro-chrome markets in South Korea and Japan have held steady, supported by higher prices in China. Metal Bulletin’s assessed spot high-carbon ferro-chrome price in South Korea was assessed at $0.85-0.90 cif on August 10, unchanged from a week earlier. The price in Japan narrowed to $0.86-0.90 cif on August 10, from $0.85-0.90 cif previously.
“Offers in the spot market are going up, though no deals have been heard of yet,” a trader in Tokyo said. Trade in Japan’s spot market has been at a low level this week due to a public holiday on August 11.
European low-carbon FeCr up, other grades seen following
The European ferro-chrome market for low-carbon ferro-chrome (Cr 0.1%) has moved up two cents on the low end of the range to $1.92-2.03 per lb, while high-carbon ferro-chrome was unchanged.
European traders expect higher prices in the next few weeks as South African suppliers should be targeting a recovery in the benchmark for deliveries in the next quarter, while there have been steady increases in both chrome ore and charge chrome prices to China and Europe this quarter.
The fourth quarter is also when steelmakers traditionally ramp up their operations ahead of year-end holidays, so increased demand for depleted raw material stock levels that are used in steel production are expected. Metal Bulletin’s ferro-chrome benchmark indicator suggests that the price would be $1.24 per lb cif Europe, if settled on August 11, compared with the current quarterly benchmark of $1.10 per lb.
Delivered European high carbon ferro-chrome spot prices stood at $1.10-1.20 per lb on August 11, steady with the previous assessment. Metal Bulletin’s UG2 chrome ore index is up $10 to $178 per tonne cif China.
US high-carbon ferro-chrome edges higher
The US high-carbon ferro-chrome market edged up this week amid tight supply. Spot prices for US high-carbon ferro-chrome, in-warehouse Pittsburgh, moved to $1.38-1.45 per lb on August 10, from $1.38-1.44 per lb previously, according to Metal Bulletin sister publication AMM’s latest assessment.
Market participants noted slightly higher trade activity after a mostly inactive start to the month.
“It has been really busy in the past couple of days with enquiries,” a supplier source told AMM, noting an increase in inter-merchant trading.
Despite the recent increase in buying enquiries, sources said overall trading activity is relatively slow in the US summer, while expecting stronger business conditions through late August and September. While spot demand has been slow in the northern hemisphere summer, US spot prices have held at a premium to other international markets as tight supply has supported prices.
“The big suppliers are not going to sell to the trade unless they are at least getting index prices,” a second supplier source said.
“No one has been willing to bring material into the USA to take a position,” a third supplier source said. “There’s not enough spot demand to take that risk.”
Suppliers have not felt pressure to unload their inventories at lower prices, citing persistent strong demand on long-term contracts.
“Contract business volumes have been great, well above estimates coming into the year,” a fourth supplier source said.