GLOBAL CHROME WRAP: Chinese prices climb again on strong stainless sentiment; European market tracks

Chinese chrome ore and ferro-chrome prices have increased in the past week on lower import levels and limited domestic supply amid strengthening stainless steel and nickel prices.

  • Chinese spot ferro-chrome prices rise 7%
  • Chrome ore jumps 13%, tracking alloy higher
  • Alloy prices edge higher in Japan and South Korea
  • European alloy market stirs

Metal Bulletin’s price quotation for spot Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) increased nearly 7% to 8,500-8,600 yuan ($1,276-1,291) per tonne on Friday August 25, equivalent to about 98-100 cents per lb.

UG2 chrome ore prices also followed the increasing trend, with deals reported done at $220-240 per tonne cif China. The index was calculated at $215 per tonne on Friday from the previous week’s index at $190 per tonne.

Metal Bulletin’s price quotation for Turkish lumpy chrome ore edged up $5 at the high end of its trading range to $310-330 per tonne.

“We believe as alloy prices increase, ore prices will continue to do so as large producers show they are in no need of cash and prefer to keep tonnes in the ground than allow depressed pricing,” a chrome supplier told Metal Bulletin.

China’s ferro-chrome imports fell to a 2017 low of 170,350 tonnes in July, down 50.21% year on year and 9.95% from June, according to Chinese customs data.

Ferro-chrome imports from South Africa came in at 72,265 tonnes, down 70% year on year and 45% in a month, leading to further expectations of higher ferro-chrome tender prices for September.

Metal Bulletin’s charge chrome index, which tracks South African imports to China, rose 7 cents to 99 cents per lb, cif Shanghai.

“Imports from South Africa have been lower than market participants’ expectations,” a ferro-chrome trader said.

Another trader said: “Amid robust demand from Chinese stainless steel sectors, the lower-than-expected import ferro-chrome data has exacerbated concerns of ferro-chrome supply tightness.”

Tender prices
Market participants expect higher tender prices from stainless steel mills in the near term. China’s determination to improve air quality in the country ahead of the autumn and winter seasons is also supporting domestic ferro-chrome prices because the government policies mean cutting or shutting production for environmental checks.

“Production in Qinghai and Sichuan provinces is still limited by environmental inspections, while Hunan province and Guizhou province produce at higher costs. Volume increases may mainly come from Inner Mongolia. But increasing volume in the near future won’t change the tight supply situation today,” a third source said.

A major stainless steel mill said: “The [ferro-chrome] supply is indeed tight and we think 8,500 yuan per tonne is a reasonable tender price if stainless steel prices can be sustained in the next week.”

Metal Bulletin’s price quotation for contract prices of Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) have been flat at 6,800-7,500 yuan per tonne in the past week, with no new tender prices for September, equivalent to about 79-87 cents per lb.

Downstream, China’s domestic stainless steel prices increased further in the past week on low inventories and costlier nickel. Metal Bulletin’s assessment of prices for benchmark 304 stainless cold rolled coil was 16,200-16,700 yuan ($2,432-2,507) per tonne (including VAT) in the major market of Wuxi for the week ended Thursday August 24, up 800-900 yuan per tonne from a week before.

Meanwhile, another stainless steel raw material, nickel, has seen prices climb. The three-month nickel price on the London Metal Exchange reached $11,825 per tonne further on August 23 – the highest level since December 2016.

Elsewhere in Asia, ferro-chrome prices continued to strengthen on the back of price performance in China.

Metal Bulletin’s price quotation for high carbon ferro-chrome, cif Japan rose to 93-96 cents per lb on Thursday August 24, up 3 cents at both ends of the range.

Metal Bulletin’s price quotation for high carbon ferro-chrome, cif South Korea rose to $0.95-1.00 per lb on Thursday, up from 88-95 cents per lb previously.

Europe picks up after seasonal slowdown
The European market, which had been bucking the strengthening trend in Asia and the USA, has increased in line with buying enquiries after the seasonal slowdown. Metal Bulletin’s price quotation for high-carbon ferro-chrome, delivered in Europe is up to $1.15-1.22 per lb, from $1.10-1.20 per lb. One supplier reported selling 400 tonnes of high-carbon ferro-chrome at $1.22 per lb delivered, and another 200 tonnes equivalent at $1.20 per lb delivered.

“European consumers and traders may expect additional imports to serve the spot market after the summer break but looking at the movements in China this becomes rather unlikely,” a source said.

“Availability of spot volumes in Europe are producers are giving preference to Asian and US spot markets. European-based traders have been enquiring non-stop in the past week and are willing to pay $1.15-1.25 per lb fca [free on truck] warehouse Europe.”

Consequently, European price levels are expected to increase in the coming weeks, particularly as the traditional end-user spot buyers come to the market from September after the traditional slower summer trade.

US high-carbon ferro-chrome prices hold despite inactivity
The US high-carbon ferro-chrome market remained steady as the market remained quiet as the summer nears an end.

Spot prices for US high-carbon ferro-chrome held flat at $1.40-1.48 per lb on August 24, unchanged from the previous week, according to Metal Bulletin sister publication AMM’s latest assessment.

Spot market demand remained limited, but prices continued to see support on tightened supply.

“We’ve seen a few bits and pieces of business this week, but prices are all firmly in the $1.40’s [per lb]. It really shows how scarce material is in the trade’s hands,” a supplier source said to AMM.

Improving sentiment overseas has also provided support, mitigating concerns over whether pricing would slide, closing the significant gap between US prices and the global markets.

“We haven’t seen much of a difference yet, but it is definitely good to have the positive developments in Asia. At least there won’t be talk of a negative price correction in the US,” a second supplier source said.

“It is clear that the market is gaining more confidence in current price levels. We could even see upside if global prices keep running,” a third supplier source said.

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