GLOBAL CHROME WRAP: Expectations of lower China May FeCr bid prices keep markets flat

Global ferro-chrome markets were flat on Friday April 21, with suppliers holding their offer prices as they await new monthly tenders for May from Chinese stainless steel mills; meanwhile, markets in the west are being supported by relatively low availability in the USA but are facing pressure on expected lower chrome ore prices in the near term.

• China expects lower May tenders on weaker steel demand and chrome ore market
• South Korea eyes China, while Japan is seen supported
• Low availability in the USA should underpin near term price action
• Europe markets are steady, but downward pressures lurk 

China’s contract ferro-chrome price was assessed as steady from the week before at 9,600-9,850 yuan ($1,395-1,432) per tonne on Friday April 21, with domestic stainless steel mills expected to release their new monthly ferro-chrome tender prices for May in the next week. A figure of 9,600-9,850 yuan per tonne is equivalent to $1.08-1.11 per lb.

The April ferro-chrome tender price was lower than expected, being set at 9,600 to 9,850 yuan per tonne, from a forecast 10,000 yuan per tonne. 

Market sentiment suggests that the new tender price from Chinese stainless steel mills will drop further on weak demand from the domestic stainless steel sector, as well as a lower chrome ore price.

“It [May tender price] is likely to fall to 9,300 yuan per tonne, [or] even lower to 9,000 yuan per tonne,” according to an official at Taiyuan Iron & Steel (Tisco).

“We have purchased enough, [we are] not eager to buy for May,” an official at Tsingshan Group said.

Another industry source said that while the tender price for May should be released in the last week of April, any delay until after the May Day national holiday in China would not be significant.

Nickel prices on the London Metal Exchange fell to a ten-month low of $9,306 per tonne on Tuesday April 18 on a weak stainless steel sector and as more Indonesian NPI production capacity has been brought online.

As Chinese stainless steel mills can buy more domestic feedstock supplies at present than in recent months, another stand-off between charge chrome sellers and Chinese stainless steel mills has emerged in April. There have been no reports of sales from South Africa cargoes or Indian cargoes. One deal, though, was heard at around $1.06-1.08 per lb for South African material. The ferro-chrome import charge chrome index was assessed at $1.15 per lb of contained chrome, cif Shanghai on Friday. 

Asian markets eye Chinese developments
Spot high-carbon ferro-chrome price in South Korea and Japan were stable last week, with dealers also awaiting the Chinese steel mills’ May tender price. Metal Bulletin’s spot high-carbon ferro-chrome price in Japan was assessed at $1.15-1.22 per lb cif Japan, while the market in South Korea was at $1.15-1.2 cif South Korea

Any drop in Chinese prices may affect the market in South Korea, according to industry sources, although Japan looks steadier amid higher domestic stainless steel production in line with consumption in the car industry. Japanese traders said they are targeting a price above $1.20 per lb cif Japan.

European trades rangebound; US market steady
In Europe, markets have also been stable, with some suppliers reporting deals within current spot price ranges, according to Metal Bulletin’s latest assessed data. High carbon ferro-chrome prices were assessed at $1.27-1.42 per lb to major European destinations, with any deals being done mostly between $1.30 and $1.40 per lb.

The low-carbon market has seen virtually no deals. Low-carbon ferro-chrome prices are around $1.13-2.22 per lb, depending on carbon content, while low phosphorous alloy is at $1.37-1.50 per lb.

Charge chrome prices were reported at about $1.15 per lb to Asia, but as much as $1.25 per lb to Europe where demand was higher for prompt shipment. Still, market sentiment suggests that chrome ore prices will drop through the rest of the current quarter.

The US ferro-chrome market has been mostly steady in the past week, with little business reported. US spot prices for high-carbon ferro-chrome were assessed at $1.43-$1.49 per lb on April 20, off slightly from $1.44-1.48 per lb the week before, according to Metal Bulletin sister publication AMM’s latest assessment.

“The spot market has been quiet,” a second supplier source said to AMM. “There is not much in terms of RFQs [requests for quotation], but we’ve offered high numbers at whatever business comes our way and the buyers are coming back and booking right away.”

Despite low key trading activity, spot prices have been relatively steady as availability is not plentiful. Current US market supply tightness is expected to support domestic prices in coming weeks, market participants said.

Chrome ore market under pressure
In China, no deals were reported for UG2, although the market is seen dropping with industry talk of some deals done below $300 per tonne. Metal Bulletin’s chrome ore UG2 concentrates index was assessed at $355 per tonne on Friday April 21. 

There are high levels of stocks at Chinese ports, yet there are still firm offer prices on the supplier side. Chrome ore inventories in China were at 1.977 million tonnes as of Friday April 21, from 1.755 million tonnes in the week before, according to industry data.

“We won’t buy as the offer price is not reasonable; the Chinese spot ferro-chrome price has fallen but UG2’s offer price is still firm,” a major Chinese ferro-chrome producer said. Another major ferro-chrome producer said miners made profits even when they sold at $100 per tonne, yet are resisting offer prices at $370 per tonne. Market sentiment suggests that the chrome ore market will succumb to downward pressure if the May tender price from steel mills is lower.

European industry sources said South Africa chrome ore suppliers have been offering UG2 at $370 per tonne, but have concluded business at $360 per tonne on a spot basis, with one deal of about 3,000 tonnes being reported. The most recent offer prices are being reported at $330-360 per tonne amid industry talk that as low as $300 per tonne may be reached in coming weeks.

Turkish chrome ore suppliers have been offering material $390-420 per tonne, but no firm business was done. Metal Bulletin’s assessment for Turkish lumpy chrome ore was at $370-390 per tonne on Friday.