GLOBAL CHROME WRAP: Ore prices up 3% on China’s steel strength; domestic alloy edges higher

Chrome ore and domestic ferro-chrome prices have rebounded in China as the country’s stainless steel sector strengthens.

  • Chrome ore and domestic ferro-chrome prices stage recovery in China
  • Import cargoes lose their premium to domestic material
  • Alloy prices flatline in Japan and South Korea
  • European ferro-chrome prices slide, lower quarterly benchmark expected
  • Alloy price hold in the United States

Chrome ore and Chinese domestic ferro-chrome prices rose on Friday December 8 as a result of a slightly stronger domestic stainless steel market and traders preparing to take chrome ore positions.
Metal Bulletin’s UG2 chrome ore index reversed the previous week’s losses and increased 3% to $167 per tonne, cif China.

“We can feel an obvious increase both on deals and offers on the UG2 side on a cif basis and also Chinese spot prices in Tianjin port,” a chrome ore trader based in Tianjin told Metal Bulletin.

China’s domestic stainless steel market rose slightly over the past week due to low inventories

During the week, when the price was $162 per tonne, traders said they believed the chrome ore price was close to its floor. Some are keen to take positions in order to benefit from any upside in the near future, sources said.

“I will start to take some position if the price falls to $160 per tonne,” a chrome ore trader based in Shanghai told Metal Bulletin.

South African producers increased their offer prices in response to the rand strengthening over the past month, a second trader, based outside China, told Metal Bulletin.

“I’d say we are definitely very close to the bottom, especially as the rand has strengthened. Buyers have said they are not able to pick up cargoes at the older dollar-denominated numbers,” the second trader said.

“Traders are willing to enter the market. They may take their chance to buy now; if they buy at $160 the price is unlikely to go to $120,” the trader added.

The increased chrome ore price cif China also lent some help to Chinese domestic spot ferro-chrome prices, which had dropped the previous week on lower tender prices from Chinese mills.

Metal Bulletin’s price quotation for Chinese spot domestic ferro-chrome rose 100 yuan per tonne to 7,300-7,400 yuan ($1,102-1,118) per tonne on Friday, equal to 84.2-85.4 cents per lb.

But import prices dropped due to the recent premium on overseas cargoes compared with domestic.

Metal Bulletin’s charge chrome index, cif Shanghai, declined to $0.85 per lb as of Friday December 8, in line with Chinese domestic ferro-chrome spot prices.

Metal Bulletin’s price quotation for Chinese domestic ferro-chrome on contracts rolled over at 6,900-7,100 yuan per tonne, equal to 80.7-83.0 cents per lb.

Elsewhere in Asia, high-carbon ferro-chrome prices fell in Japan and South Korea because spot activity has given way to long-term contract negotiations.

Spot offers decreased and the only Japanese customers in the spot market were those that quickly required prompt delivery, a Japanese trader told Metal Bulletin.

Metal Bulletin’s price quotation for high-carbon ferro-chrome, cif Japan fell 2 cents on Thursday December 7 to $0.86-0.93 per lb.

Metal Bulletin’s price quotation for high-carbon ferro-chrome, cif South Korea dropped 1 cent at the low end of its trading range to $0.85-0.90 per lb.

“The market is shrinking as tender volumes are decreasing as steel mills have enough stocks,” a market source told Metal Bulletin.

Europe prices dip, US holds firm
In Europe, high-carbon ferro-chrome prices dropped as suppliers looked to encourage buying interest from consumers.

Metal Bulletin’s price quotation for high-carbon ferro-chrome, delivered in Europe dropped to $1.22-1.30 per lb on Friday, after holding at $1.25-1.35 per lb for six consecutive weeks.

Consumers are relying on long-term delivery settlements, according to sources, and market sentiment suggests balanced-to-ample availability through the next quarter means the European charge and high-carbon ferro-chrome benchmark is likely to fall for the first quarter of 2017.

The quarterly benchmark negotiations are due to start imminently and an agreement is expected before the end of December.

Meanwhile, in the US the high-carbon ferro-chrome market continued to withstand downward pressure overseas.

Spot prices for high-carbon ferro-chrome, in warehouse Pittsburgh held firm at $1.40-1.48 per lb on Thursday, according to American Metal Market’s latest assessment.

Spot trading activity was slow as market participants focused on concluding the last outstanding long-term contracts.

“The market has remained unchanged, but we aren’t really seeing all that much spot activity at this point. We are just trying to tie up the rest of our contract business for next year,” a supplier source told American Metal Market.

As December progresses, market participants suspect spot activity may continue to wane as the holiday season approaches, with little price change expected over that time.

Metal Bulletin chrome prices

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