GLOBAL CHROME WRAP: European benchmark elevates; Chinese market weakens on low tender price
European spot prices tracked higher as the European ferro-chrome benchmark settled considerably higher on Friday September 22, while Chinese domestic prices slipped as lower mill tender prices weighed down the market.
• European ferro-chrome benchmark settles 26.4% higher
• European low-carbon ferro-chrome market reaches annual peak
• Tsingshan Group took the lead to announce a lower ferro-chrome tender price
• Other Chinese stainless steel mills are likely to follow suit
• Chinese spot alloy prices retreat on weaker nickel, stainless steel prices
• South African charge chrome import prices, chrome ore prices also edged lower
• US market remains steady despite slow spot demand
European market moves up as benchmark jumps
The European high-carbon ferro-chrome market has increased further in the past week, extending a rally from the week before, although suppliers reported deals done in a wider range.
The move coincides with a jump of more than 26% in the fourth quarter benchmark price of charge chrome to $1.39 per lb, settled between South African producers and European consumers in the steel sector.
The benchmark settled within a couple of cents to Metal Bulletin’s latest weekly ferro-chrome benchmark indicator price of $1.42 per
Metal Bulletin’s latest price quotation for spot high-carbon ferro-chrome, delivered Europe, is up two cents at the top end of the range to $1.25-1.40 per lb on September 22. Deals were reported at both the top and bottom end of the range.
However, steeper climbs have been reported in the refined grades over the past few weeks, with the latest assessment for the most widely traded 0.10% refined alloy up to $2.20-2.30 per lb, from $2.00-2.15 per lb previously. Around 300 tonnes of alloy were reported being sold across the new price spread. The market was as low as $1.90-2.00 per lb at the start of the current quarter.
Metal Bulletin-assessed prices for low-carbon ferro-chrome 0.06% hit a six-year high of $2.30-2.40 per lb on September 22, compared with $2.10-2.20 per lb two weeks earlier. The market was last at that level in September 2011 when prices were in a range of $2.25-2.45 per lb.
The current EU anti-dumping investigation against refined ferro-chrome imports from China, Russia and Turkey is influencing prices in Europe at present, one supplier source said.
“Traditional spot buyers are staying away from Turkish and Russian material....and are already discussing possibilities of long-term contracts for 2018,” he said, adding that low carbon ferro-chrome prices above $2.40 per lb in Asia is encouraging sales away from markets in the West.
China domestic market weighed down by lower tenders
Market sentiment in the Chinese ferro-chrome market weakened on the back of major domestic steel mill Tsingshan Group announcing a lower tender price for October, possibly setting the tone for what is to come from fellow steel mills, while sharp declines in nickel and stainless steel prices pushed contract and spot ferro-chrome prices lower. Charge chrome and UG2 cif China prices followed the weaker trend.
Metal Bulletin’s latest price quotation for contract prices of Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) stood at 8,200-8,400 yuan ($1,242-1,272) per tonne on September 22, based on major Chinese stainless steel mills’ tender prices for October. This is 100 yuan lower than the previous week’s assessment of 8,300-8,500 yuan per tonne.
The latest contract price equals 96-98.6 cents.
With one week left before China’s National Day Golden Week holidays, Tsingshan was the first major Chinese stainless steel mill to announce its October tender ferro-chrome price, setting a price of 8,396 yuan per tonne on September 22. The new price is 100 yuan lower than its September offer price.
“Baosteel is likely to follow Tsingshan’s steps and set an October tender price of 8,400 yuan per tonne – almost flat with Tsingshan’s level and also lower by 100 yuan compared with its September tender,” a Baosteel official said.
“Tisco (Taiyuan Iron&Steel) is very likely to set its October ferro-chrome tender price at 8,200 yuan per tonne, 200 yuan lower than Baosteel and Tsingshan’s price as usual and down 100 yuan from its September offer price,” an official with Tisco said.
“The positive outlook for October tender prices was broken by the sharp declines in nickel and stainless steel prices,” a major ferro-chrome producer said.
“Given the downturn in both nickel and stainless steel prices over the past two weeks, a decrease of just 100 yuan in ferro-chrome tender prices from stainless steel mills is relatively mild compared to what the market had expected,” the ferro-chrome producer added.
Metal Bulletin’s price quotation for spot Chinese domestic high-carbon ferro-chrome (6-8% C, basis 50% Cr) dropped to 8,300-8,500 yuan per tonne on September 22, down from 8,400-8,600 yuan per tonne previously.
The domestic spot price is equal to $0.985-1.01 per lb, down from the previous week’s $0.99-1.02 per lb.
Both Chinese ferro-chrome contract prices and domestic spot prices have been pressured lower by sharp declines in nickel and stainless steel prices over the past week.
The London Metal Exchange three-month nickel price plummeted 5.3% or $585 during trading on September 22, to close at $10,420 per tonne. This is down 14.7% from the yearly high of $12,220 per tonne set on September 4.
Meanwhile, China’s domestic stainless steel prices fell sharply last week amid softening demand and rising supply, Metal Bulletin has reported.
Metal Bulletin’s assessment of prices for benchmark 304 stainless cold rolled coil stood at 15,500-15,900 yuan per tonne including VAT in the major market of Wuxi for the week ended September 21, down 900-1,000 yuan per tonne from a week earlier. Earlier in the month, prices had reached a 2017 high of 16,800-17,200 yuan per tonne. This compares with the annual low of 11,800-12,500 yuan per tonne hit on June 15.
Prices for imported charge chrome weakened amid a stalemate between stainless steel mills and ferro-chrome suppliers.
Metal Bulletin’s charge chrome index, which tracks South African imports to China, dipped to $1.05 per lb cif Shanghai on September 22, down 2 cents from the previous week.
“It was rare for a deal to be heard over the past seven days as the market was waiting for Chinese tender prices as well as the European charge and high-carbon ferro-chrome benchmark prices, which are key indicators for ferro-chrome transactions,” a ferro-chrome trader said.
“Delivery delays in South Africa have largely been resolved with only the port in Durban still seeing some delays – which won’t have much of an impact. October and November cargoes from South Africa to China will be larger. We will negotiate on charge chrome prices next week,” an official from a major Chinese stainless steel mill said.
UG2 chrome prices also edged lower amid thin trading volume over the past week.
Metal Bulletin’s UG2 chrome ore index, cif China, eased to $234 per tonne on September 22, down $2 from previously.
“There was also a stand-off in UG2 transactions with miners insisting on higher offers, but Chinese ferro-chrome producers have shown limited interested ahead of key indicators being settled,” a chrome ore trader said.
“Once the key ferro-chrome prices have been settled … trading volume may pick up,” the chrome ore trader added.
US spot market holds course
The US high-carbon ferro-chrome market continued to hold steady, as spot market demand remained lacklustre.
Spot prices for US high-carbon ferro-chrome held firm at $1.42-1.50 per lb on September 21, unchanged from the previous week, according to Metal Bulletin sister publication AMM’s latest assessment.
Spot market demand experienced a slight bump last week, but trading activity remain thin overall.
“Demand was a little better this week but nothing earth shattering,” a supplier source told AMM.
Despite the lack of significant spot market activity, prices have remained firm, a trend which is expected to continue after the European ferro-chrome benchmark settled above above market expectations.
“The benchmark settled higher than we expected. But prices had been moving up in China so it makes sense,” a second supplier source said.
“I am not sure if this will have a big effect on the high-carbon ferro-chrome market here though,” a third supplier source said. “Psychologically it should, but when the benchmark was at $1.65, we didn’t see prices at $1.80 [per lb] here.”
“The biggest thing the benchmark will do for the US market is ensure support for pricing at least at current levels. The USA has been at a premium for quite some time, but now the EU and Asia will be at the levels they should have been,” the second supplier source added.