GLOBAL CHROME WRAP: Chinese spot FeCr prices rise on increased demand, underpinning sentiment in other Asian markets

Chinese high-carbon ferro-chrome prices increased in line with stronger consumer demand last week, which gave support to market sentiment in other Asian markets where prices were steady. The European high-carbon ferro-chrome market was also stable, with suppliers holding firm on a base price of $1.10 per lb, despite low-key trading activity in the seasonal slowdown.

  • Chinese spot ferro-chrome prices push higher
  • South Korean, Japanese markets hold firm
  • European prices steady amid low-key trading activity
  • US spot activity slows, prices dip slightly

Metal Bulletin’s latest assessed spot price for Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) increased to 7,200-7,400 yuan ($1,071-1,101) per tonne on Friday August 4, up from the previous week’s assessment of 7,000-7,400 yuan per tonne. A price of 7,200-7,400 yuan is equivalent to about 83-85 cents per lb.

Chinese traders said the spot price in northern China was 7,200 yuan per tonne delivered, while in the southern and eastern parts of the country the market was 7,400 yuan per tonne delivered. The spot market has been pushing higher in line with increased demand from domestic steelmakers, which have been posting increased profits this quarter.

“China’s stainless steel production in July and August will increase on more customer orders and stronger profit levels, prompting more ferro-chrome demand,” a source at a major trading company said.

“We estimate that Chinese stainless steel production in July will be 2.15 million tonnes, 130,000 tonnes higher than the month before, and in August production levels may reach 2.18-2.20 million tonnes,” the source added.

Stainless steel production in June was 2.02 million tonnes according to Chinese steel information provider Custeel’s statistics. Global crude stainless steel production is forecast to reach a new record annual total of 48.5 million tonnes this year, according to other industry data. That would exceed the previous record high set in 2016 by almost 6%.

Despite Beijing’s efforts to control the growth of domestic steel production, an expected jump of about 8% year-on-year to almost 27 million tonnes of stainless steel will represent about 55% of total forecast global production in 2017, according to international steel consultancy MEPS

Chinese stainless steel prices started to increase in the second half of June this year, with Metal Bulletin’s assessed benchmark 304 stainless cold rolled coil (2mm) prices at 14,500-14,900 yuan per tonne (plus VAT) in the major market of Wuxi on Thursday July 27, up as much as 21% from market levels of 11,800-12,500 yuan per tonne on June 15.

Additionally, domestic environmental inspections in some areas of China have been cutting ferro-chrome production, which suppliers have been turning to their advantage. Metal Bulletin’s assessment for domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) contract prices held at 6,800-7,000 yuan per tonne for the fourth consecutive week, with Tsingshan Group, Baosteel, Taiyuan Iron&Steel (Tisco), Jiuquan Iron&Steel (Jisco) all announcing flat tender prices for August. A price of 6,800-7,000 yuan is equal to about 78-80 cents per lb.

China imported 131,681 tonnes of ferro-chrome from South Africa in June, down from May’s 166,601 tonnes, according to China’s customs data. Chinese sources suggest South African exports fell to just 70,000 tonnes of the alloy in July.

Metal Bulletin’s charge chrome index, cif Shanghai edged up a cent to 84 cents per lb. Confirmed business and new offer prices were reported above the index price, with the latter up at 88 cents per lb, sources said. Metal Bulletin’s UG2 chrome ore index climbed two dollars to $168 per tonne, cif China. Turkish chrome ore lump 40-42% grade was steady at $275-280 per tonne cfr Chinese ports in the past week.

South Korea, Japan steady
The high-carbon ferro-chrome free markets in South Korea and Japan were stable in the past week, with firmer prices in China underpinning market sentiment. Metal Bulletin assessed the spot high-carbon ferro-chrome prices in South Korea and Japan at $0.85-0.90 cif on August 3, unchanged from the previous assessment. Offer prices are at the upper end of the range in Japan, sources said.

South Korea’s stainless steel production is forecast to record a year-on-year increase of about 3.5% to a total of 2.35 million tonnes in 2017, according to MEPS data. More moderate annual growth of below 2% is expected in Japan at about 3.15 million tonnes.

European market stable
The European ferro-chrome market for high-carbon alloy was unchanged in the past week, with suppliers holding firm on the baseline level despite low-key trading activity amid the seasonal slowdown. Few trades were reported.

Delivered European high-carbon ferro-chrome prices stood at $1.10-1.20 per lb on August 4, flat with the previous assessment.

“The European market place is on summer break, absolutely zero enquiries from Italy, Scandinavia, Spain and UK,” one source said. “A few buyers are looking for some minor volumes in Central and Eastern Europe, with offer prices being quoted at $1.15 [per lb] delivered duty paid.”

One deal was reportedly done at $1.10 per lb fca for high-carbon ferro-chrome to Germany, with another low-phosphorous tonnage sold to the same country at $1.28 per lb delivered. The European Union’s annual crude steel stainless steel production is forecast to total 7.4 million tonnes in 2017, which would be less than 2% above the total in 2016, MEPS said.

US spot demand slows to a halt

The US high-carbon ferro-chrome market continued to see low levels of trading activity last week, with prices holding relatively steady.

US spot prices for high-carbon ferro-chrome, in-warehouse Pittsburgh were assessed at $1.38-1.44 per lb on August 3, down 2 cents on the high end of the range from $1.38-1.46 per lb previously, according to Metal Bulletin sister publication AMM’s latest assessment.

Although spot market demand remained limited, US suppliers were able to hold prices at significant premiums to the global market.

“Nothing has changed in this market,” a supplier source told AMM. “The big suppliers have a stranglehold on the market, and they aren’t going to do anything that will undermine prices.”

Despite the slow spot market, market participants were hopeful the market was due to pick up in the weeks ahead.

“July was pretty slow. August hopefully will be a little better. A lot of the outages are done and plants are up and running again,” a second supplier source told AMM.

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