GLOBAL CHROME WRAP: Chinese spot prices rise; smelters call for further rises

Spot ferro-chrome prices rose in China on Friday July 28 on tight supply and amid calls for further price rises to incentivise production.

  • Chinese spot ferro-chrome prices rise
  • Chinese contract ferro-chrome prices hold with tender rollovers
  • Smelters call for further price increases to guarantee supply
  • UG2 chrome ore edges lower as Turkish ore firms
  • European alloy prices inch higher

Metal Bulletin’s price quotation for domestic high-carbon ferro-chrome in China’s spot market rose to 7,000-7,400 yuan ($1,039-1,098) per tonne on Friday, 200 yuan higher than the previous assessment.

The domestic spot price is equivalent to 80-85 cents per lb.

Major stainless mills Tsingshan Group and Baosteel released their tender prices for August at 7,000 yuan per tonne on Friday, unchanged from July’s prices.
The majority of Chinese market participants said they are expecting Northern Chinese stainless steel mills Taiyuan Iron & Steel (Tisco) and Jiuquan Iron & Steel (Jisco) to follow suit and release flat tender prices of 6,800 yuan per tonne for August.

Metal Bulletin’s assessment for domestic high-carbon ferro-chrome contract prices held at 6,800-7,000 yuan per tonne for the third consecutive week.

Ferro-chrome producers – many of whom are holding high-priced raw material inventory – called for higher ferro-chrome prices to guarantee sufficient supply.

“Aside from the long contracts locked in by major stainless steel mills, spot cargoes are very tight and need to command a premium,” a ferro-chrome producer told Metal Bulletin.

“Stainless steel mills are earning improved profits, but they still calculate our cost based on the cheapest chrome ore prices in the market. They have forgotten that many ferro-chrome producers still have large inventories of high-price chrome ore on their hands,” the producer added.

Metal Bulletin’s charge chrome index, cif Shanghai rolled over at 83 cents per lb.

Confirmed business was reported both above and below the index price, while offers have risen as high as 86-87 cents per lb.

Metal Bulletin’s UG2 chrome ore index edged down $1 to $166 per tonne, cif China.

High stocks weigh on prices
Large chrome ore inventories have been undermining prices for weeks, despite many market participants pointing out that the material is “locked”, having been purchased at much higher numbers is unlikely to be sold at a loss in the immediate future.

Some buyers – who are holding material purchased at $250-300 per tonne – are continuing to buy cheaper material to average out their purchase price, a trader told Metal Bulletin.

“There’s 2.5 million tonnes of chrome ore in stocks, which is a lot relative to last year, but a significant portion is expensive and large companies that open letters of credit for importers are exposed to that,” the trader said.

“Their clients are still buying to average out their purchase price,” the trader added.

Metal Bulletin’s price quotation for Turkish lumpy chrome ore (40-42%) Cr rose to $275-280 per tonne, cfr China, up $5 at the low end of the range.

Elsewhere in Asia, spot high-carbon ferro-chrome prices held, as market participants had spent the week waiting for Chinese mills to announce tender prices.

Metal Bulletin assessed spot high-carbon ferro-chrome prices in South Korea flat at $0.85-0.90, cif on Thursday July 27.

Metal Bulletin’s price quotation for high-carbon ferro-chrome, cif Japan were also unchanged at $0.85-0.90 per lb.

High quality FeCr boosts European prices
High-carbon ferro-chrome prices edged up slightly in Europe as high quality material continued to fetch prices toward and above the high end of Metal Bulletin’s price range.

Delivered European high-carbon ferro-chrome prices rose 2 cents at the high end to $1.10-1.20 per lb.

There were unconfirmed reports of material becoming available below the $1.10 per lb level, but no details were given.

In the USA, ferro-chrome prices held in thin trading.

Spot prices for high-carbon ferro-chrome, in-warehouse Pittsburgh, came in flat at $1.38-1.46 per lb on July 27, according to Metal Bulletin sister publication AMM’s latest assessment.

“Some buyers bought in early July and went away, so it should be at least another week or two before we see too much going on,” a supplier source told AMM.

Despite the low levels of spot activity, the tightly controlled supply within the USA has kept prices elevated at significant premiums to the global market, making it difficult for traders to obtain material in recent weeks.

“The big suppliers aren’t offering into the trade at lower prices. They are not going to create any more competition that could lower prices, with the majority of their volume tied to contracts,” a third supplier told AMM.

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