GLOBAL CHROME WRAP: Chinese ferro-chrome, UG2 prices under pressure from rising imports, expectations of lower tender prices

Chinese ferro-chrome prices remained under pressure last week, as elevated imports and expectations of lower December stainless steel mill tender prices weighed on the market.

  • Chinese FeCr, UG2 prices decline amid increased imports in October
  • Chinese participants expect lower December mill tender prices
  • Japanese market steadies; South Korean prices still under pressure
  • European market cements stability

Chinese FeCr, UG2 prices edge lower amid negative sentiment
Ferro-chrome prices in China weakened slightly on Friday November 24 amid expectations of lower December ferro-chrome tender prices from major domestic stainless steel mills.

The outlook for chrome ore and ferro-chrome prices in China was dented further following Chinese customs data that showed elevated levels of ferro-chrome shipments entering the country in October.

Metal Bulletin’s price assessment for Chinese spot domestic ferro-chrome weakened to 7,300-7,400 yuan ($1,106-1,121) per tonne on Friday, from 7,400-7,500 yuan per tonne the week prior.

The latest spot domestic ferro-chrome price is equivalent to $0.856-0.868 per lb.

Fuxin Special Stainless Steel took the lead with its 7,300-yuan-per-tonne tender to purchase 15,000 tonnes of ferro-chrome from the Chinese domestic market.

Meanwhile, fellow Chinese stainless steel mills Tsingshan Group, Baosteel and Taiyuan Iron&Steel exercised greater patience prior to releasing their December tender prices for high-carbon ferro-chrome, citing high stocks of the material and a lack of orders for stainless steel products next month.

Chinese customs data for October released on Friday was a cause for further concern in the market.

China imported 224,432 tonnes of ferro-chrome last month, representing a 63.38% year-on-year increase, but a 7.93% month-on-month decrease.

Meanwhile, China imported 1.46 million tonnes of chrome ore in October, up by 53.15% year on year and 9.92% higher month on month.

“The large imports of chrome ore indicates high ferro-chrome production in November after Chinese domestic ferro-chrome production hit a historic high of more than 510,000 tonnes [in October],” a ferro-chrome trader said.

“[Meanwhile,] imports of ferro-chrome were stable,” the trader added.

Besides the fact that Chinese stainless steel mills’ December order books are trailing those of November, amply supply of ferro-chrome is also weighing on Chinese prices for the material.

“In addition, the large amount of chrome ore imports … and chrome ore stocks at Chinese ports are weighing on chrome ore prices,” a major chrome ore importer said.

“This week, deals at $165-$170 per [dry metric tonne unit] for UG2 could be widely heard in the market as the market is quite bearish. There is virtually no spread between MG and UG2 this week,” a chrome ore trader said.

Meanwhile, Turkish chrome ore offers were stable at $335-345 per tonne. Chrome ore miners in Turkey will be shutting some production as usual this winter, and the prospect of lower supplies is supporting offer prices, Turkish sources said.

Japanese FeCr market steady; South Korean price edges lower
The Japanese high-carbon ferro-chrome spot market was stable last week, while the assessment for South Korean market was lower than a week ago amid expectations of further price falls in the country.

Metal Bulletin’s spot price quotation for high-carbon ferro-chrome cif Japan was unchanged week on week at $0.9-0.95 per lb on November 23.

A deal at $0.92 per lb was reported for a 300-tonne parcel.

There was also a deal reported at $0.96 per lb but this cargo had special delivery terms attached to the transaction and was hence considered outside the regular spot assessment range.

“It is impossible to buy from producers now and get delivery by the beginning of January,” a Japanese trader said, adding that there is opportunity to buy and sell at a good price as Chinese markets have been declining.

Meanwhile, the high-carbon ferro-chrome cif South Korea price assessment dipped to $0.89-0.93 per lb from $0.90-0.93 per lb a week ago.

A South Korean trader said he had received an offer at $0.87 per lb and was considering buying at that level.

“[The] normal price is $0.90 per lb but someone is offering $0.87 and I think we will buy some material [at this price] later this week,” the trader said.

Asian market participants were awaiting Chinese stainless steel mills December tender prices which were widely expected to be lower.

European ferro-chrome cements stability
The European high-carbon ferro-chrome market was steady last week, extending a trend of stability since the spot price hit its current range on October 20.

The market is expected to trend at or close to its present price range until negotiations for the next benchmark charge chrome settlements start early next month.

Metal Bulletin’s price assessment for high-carbon ferro-chrome on a delivered Europe basis was at $1.25-1.35 per lb on November 24, unchanged for five weeks in a row. No deals were reported on a spot basis or on an inter-merchant basis, with consumers relying on long-term delivery settlements.

Several European traders reported that some of their Indian counterparts have been offering charge chrome at around $0.80 per lb on the open market. However, that chrome has a silicon content of 3-4%, compared with standard high-carbon ferro-chrome bought and used in Europe with a silicon content of 1.5%. Consequently, European buyers have been uninterested in buying that chrome from India.

Negotiations on the next quarterly delivery settlement on charge chrome are due to start in the next couple of weeks, sources said. However, market sentiment suggests that the next benchmark is expected to drop to around $1.25 per lb, from $1.39 per lb currently.

Sources estimate that supply will be relatively ample in the next quarter against expected rates of consumption in the stainless steel sector.

The Metal Bulletin ferro-chrome benchmark indicator
dropped five cents this week to $1.24 per lb. The benchmark was at a quarterly peak of $1.41 per lb in mid-October.

Chinese charge and ferro-chrome demand is expected to be relatively low key ahead of the national New Year holiday in China in mid-February 2018. That level of trading activity is also expected to influence European market sentiment, sources said.

The US market was not assessed last week due to the Thanksgiving Holiday.