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China has extended its rally in the chrome ore and ferro-chrome markets, but price increases are being capped on a flat stainless steel market. European high-carbon ferro-chrome prices also rose in the last week of August, with a corresponding increase in the chrome ore market, while the US market increase was more subdued.
• China market climbs at slower pace • ….as domestic stainless steel price rally pauses • Europe extends climb, but traders note caution • The US market looks to add to small price increase
In the spot markets, the largest gains were seen in prices for steel-making raw materials from South Africa, from which ferro-chrome import volumes have dropped significantly in recent weeks.
Chinese chrome ore and ferro-chrome prices increased last week on persistently tight supply and strong demand heading into the last month of the third quarter, but the climb was capped as the rally in domestic stainless steel prices since mid-June levelled off.
Metal Bulletin’s price quotation for spot Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) increased almost 2% to 8,600-8,800 yuan ($1,311-1,342) per tonne on Friday September 1, equivalent to about 101-103 cents per lb.
Chinese customs data released in late August shows July imports of South African ferro-chrome hit a 2017 low of 170,350 tonnes in July, down 50.21% year on year and 9.95% from June.
Metal Bulletin’s charge chrome index, which tracks South African imports to China, increased to a fresh high since May of 105 cents cif Shanghai, from the week before when the market was 99 cents per lb.
UG2 chrome ore price index was calculated at $225 per tonne on Friday from the previous week’s index at $215 per tonne.
“In September Chinese stainless steel industry demand on ferro-chrome is likely to be robust as the total volume of Chinese imported ferro-chrome, as well as domestic ferro-chrome production, is not enough to meet stainless steel demand,” a ferro-chrome trader said.
Chinese ferro-chrome production growth may be lower than expected as output looks restricted because of Beijing’s strict environmental checks, particularly in Sichuan and Qinghai provinces, to improve air quality over the autumn and winter seasons. Chinese import levels of ferro-chrome have been knocked from South Africa where high-cost production in the southern hemisphere winter has resulted in fewer tonnages being shipped to China in July.
Moreover, Chinese importers reckon trade data will show that import levels did not increase much in August.
“China’s domestic stainless steel prices were flat last week on the preceding week as overseas importers cannot accept higher Chinese export prices and Chinese steel stock levels have increased more since the start of August according to stainless steel traders,” one second ferro-chrome supplier said.
Metal Bulletin’s assessment of prices for benchmark 304 stainless cold-rolled coil was 16,200-16,700 yuan ($2,456-2,532) per tonne, including VAT, in the major market of Wuxi for the week ended Thursday August 31, unchanged on the week.
Metal Bulletin’s price quotation for contract prices of Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) have increased to 8,300-8,500 yuan per tonne in the past week. Chinese major stainless steel mills, Taiyuan Iron&Steel (Tisco), Tsingshan Group and Baosteel have all announced ferro-chrome tender prices for September equivalent to about 97-100 cents per lb.
World nickel prices hit a new peak on Friday, September 1. The three-month nickel price on the London Metal Exchange reached $12,150 per tonne, up almost 3% on the day before and the highest level since last December.
“The three-month nickel price above $12,000 per tonne can boost stainless steel prices, then boost ferro-chrome prices,” a senior industry source said.
“Market focus is now on the Chinese stainless steel industry’s October orders and those mostly depend on if nickel prices will move steadily higher.”
China imported 170,350 tonnes of chrome ore in July, an increase of around 15% month-on-month, but a decrease of more than 5% year-on-year, according to Chinese customs data.
Japan, Korea track stronger China Import prices for ferro-chrome in Japan and Korea jumped last week as strong demand from China’s stainless steel producers prompted sellers elsewhere in Asia to increase their offer prices. Japanese ferro-chrome prices jumped 9.5%, assessed at $1-1.07 per lb cif on August 31, from $0.93-0.96 per lb.
“Offers in the $0.90s have disappeared completely. Most producers are watching the market and do not offer easily,” a trader source said. Ferro-chrome prices increased to $1-1.05 per lb on a cif Korea basis, according to Metal Bulletin’s assessment, from $0.95-1 per lb.
However, market participants sounded a note of caution on tepid demand from Korean and Japanese buyers.
“After the declaration of Tsingshan and Baosteel’s tender prices there seems to be a reluctance to discuss [higher prices]. We are waiting for [stronger offers] as we are not in a hurry to cover our order book,” a second trader said.
Still, strong signals from China are likely to keep Asian ferro-chrome prices elevated.
“Stainless steel demand is strong so we should not see an immediate fall in ferro-chrome prices,” the second trader said.
European prices climb again The European market has seen further price increases after the previous week, extending a trend in line with buying interest for high-carbon ferro-chrome, although mostly from traders. The market is on a watching brief for large-scale consumer interest through September after the traditionally slower summer months.
Metal Bulletin’s price quotation for high-carbon ferro-chrome, delivered in Europe is up to $1.15-1.25 per lb, from $1.15-1.22 per lb. One supplier reported selling 100 tonnes of high-carbon ferro-chrome at $1.25 per lb delivered, and has another 500 tonnes offered at $1.30 per lb delivered.
One supplier said that some central and northern European buyers have already secure their high-carbon ferro-chrome needs for the next quarter.
“Stock levels of high quality material are fairly balanced in Europe and producers have no interest in building stock levels when they can move large volumes into Asia,” one supplier said. As producers of low quality material are already moving their supplies into Asia, it has resulted in little availability for traders, he said.
Consequently, European price levels are expected to increase in the coming weeks, particularly as end-user spot buyers return to the market from September after the traditional slower summer trade, he added. Stainless steel mills are returning to the market after the seasonal slowdown and are pushing up their sales prices after destocking since June, plus extended supply chain lead times in steel production through November and higher nickel prices are expected to combine to at least support ferro-chrome prices in the near term.
US high-carbon FeCr market edges up The US high-carbon ferro-chrome strengthened slightly in the past week in line with market sentiment at the end of the summer holidays.
Spot prices for US high-carbon ferro-chrome edged up to $1.42-1.50 per lb on August 31, up 2 cents from $1.40-1.48 per lb from the previous week, according to Metal Bulletin sister publication AMM’s latest assessment. Although spot market demand was limited from end-users last week, prices have increased as the market outlook has strengthened in line with international spot prices.
“High-carbon (ferro-chrome) numbers are all up,” a supplier source said to AMM.
“Those who have material are taking their cue from the run-up in Asian prices.”
Supply is concentrated among a low number of suppliers, with traders looking to buy alloy. Still, although buying interest from end-users has been limited, market participants reckon market activity will pick up with delivery contract negotiations for fourth quarter deliveries through September.