GLOBAL CHROME WRAP: Chinese spot market under pressure after modest tender price increases
Spot ferro-chrome prices in China were under pressure after leading mills in the country announced lower-than-expected increases in their monthly tender prices, stating that supply during March had been underestimated.
Globally, China was the only ferro-chrome market to weaken, as prices in Japan and South Korea edged higher, while European and US prices held firm.
Metal Bulletin’s charge chrome index, cif Shanghai, which tracks South African imports into China, dropped 1 cent to $1.16 per lb on Friday March 31.
Metal Bulletin’s quotation for spot Chinese domestic ferro-chrome prices dropped 100 yuan at the low end of the range to trade at 10,200-10,700 yuan per tonne on Friday, equivalent to about $1.14-1.20 per lb, according to Metal Bulletin’s calculations.
Leading Chinese stainless steel mills Baosteel, Tsingshan and Tisco announced April purchase prices of 9,850 yuan per tonne, 9,845 yuan per tonne and 9,600 yuan per tonne, respectively.
Baosteel’s April offer price is 350 yuan higher compared with its price for last month, while Tisco’s price is 300 yuan higher than its March tender. Tsingshan did not release a tender price for March.
The tender prices equate to a range of $1.08-1.11 per lb, according to Metal Bulletin’s calculations.
Market participants had expected a much sharper rise in tender prices, in line with stronger spot prices for both domestic and imported material.
However, as mills announced more modest increases to their April tender prices, citing higher supply in March than was expected and claiming to have already bought sufficient material, some producers have responded with lower spot offers.
Sources in China attributed the greater supply of material to the completion of environmental checks in Inner Mongolia and the switching of some nickel pig iron furnaces to ferro-chrome production.
“Amid this pessimistic sentiment, ferro-chrome producers are selling their cargoes in a hurry,” a trader in China told Metal Bulletin.
Some buyers have said they will not purchase below $1.10 per lb, however no deals were reported at this level.
Other suppliers said the market for imported ferro-chrome remains healthy and claimed aggressive bids from buyers were not securing material.
“Chinese buyers have put some lower bids out, but when it comes to buying, they’re still paying the same prices as before,” an overseas supplier source told Metal Bulletin.
The lower-than-expected tender prices mean domestic ferro-chrome smelters will want to drive chrome ore prices lower to compensate, sources told Metal Bulletin.
Prices for Turkish lumpy chrome ore (40-42% Cr) dropped to $390-410 per tonne, down from $400-420 per tonne previously.
Suppliers of Turkish material have been reducing offers as they compete with suppliers of cheaper South African UG2, a trader told Metal Bulletin.
“It’s definitely coming off. We’ve had a few offers below the previous range; there are some eager sellers out there competing with UG2,” the trader said.
Metal Bulletin’s UG2 chrome ore index held at $370 per tonne for the third consecutive week, amid thin trading.
Chinese domestic ferro-chrome producers confirmed South African producers are still offering at $370 but added that they did not need to buy last week and will not buy overseas cargo while stocks are ample in Chinese ports.
Some bids and offers for UG2 were heard at $370-380 per tonne but no confirmed business was reported at such levels.
High-carbon ferro-chrome prices in Japan and South Korea tracked the Chinese tender prices higher.
Metal Bulletin’s price quotation for high carbon ferro-chrome, cif Japan rose to $1.19-1.22 per lb on March 30, up from $1.17-1.20 per lb previously.
“There have been few offers from India to Japan recently. Indian suppliers are more willing to do business with China due to the higher prices and better demand compared with Japan and South Korea,” a major trader based in Tokyo said, adding that offers during the week had exceeded $1.20 per lb, cif Japan.
Material traded at $1.17-1.20 per lb on a cif basis in South Korea on March 30, up 2 cents on the low end of the range.
“The market is firming and sellers’ offers keep rising. Last week, we heard some small volume deals at $1.14-1.15 cif South Korea, but it’s hard to find prices below $1.17 this week,” a major Seoul-based trader said.
The US ferro-chrome market maintained strength in a tight spot market and amid good demand.
Spot prices for high carbon ferro-chrome in warehouse Pittsburgh narrowed to $1.42-$1.48 per lb on March 30, up from $1.41-1.49 per lb previously, according to Metal Bulletin sister publication AMM’s latest assessment.
Spot market activity has been increasing, particularly inter-trade activity, suggesting thinner inventories within the market.
“There were definitely more enquiries from different traders, ones that don’t typically come to us,” a supplier source told AMM.
Market participants said they expect the market to hold firm due to price increases in other global regions.
“Given how pricing has strengthened outside of the USA over the last couple weeks, particularly in Asia, there doesn’t look to be any real potential for downside in the near term,” a second supplier source said.
“There aren’t many options for those looking to import material at lower prices,” he added.
High carbon ferro-chrome held steady in Europe for the third consecutive week at $1.27-1.42 per lb on a delivered basis.
Volume picked up during the week and business was transacted all the way across the trading range.
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