GLOBAL CHROME WRAP: Prices drop across all regions as steel market remains weak

Ferro-chrome and chrome ore prices weakened in all global regions as consumer interest and spot activity became increasingly scarce due to weak steel markets.

  • Spot alloy prices fall across the world
  • Chinese sources expect lower June tender prices from mills
  • Chrome ore prices weaken but the pace of decline slows
  • European consumer interest drops
  • USA suppliers hope tight supply will limit price decline

Metal Bulletin’s spot price quotation for domestic Chinese ferro-chrome, delivered duty paid, dropped to 6,600-6,900 yuan per tonne, from 6,900-7,100 per tonne previously.

Market participants anticipate lower June tender prices from Chinese mills and are unwilling to enter the spot market in the meantime.

“As market participants think June ferro-chrome tender prices from stainless steel mills will go on sliding, deals are rare in the spot market, ” a Chinese ferro-chrome trader said.

Prices for imported cargoes from various regions also dropped in line with the lower domestic prices.

Metal Bulletin’s charge chrome index, cif Shanghai dropped to 86 cents per lb, from $1.11 per lb previously.

Chrome ore prices continued to fall, but at a much slower pace than in previous weeks, when prices fell by as much as 35%.

Metal Bulletin’s South African UG2 chrome ore price slid to $143 per tonne, from $151 per tonne on May 12.

Metal Bulletin’s price quotation for Turkish lumpy chrome ore dropped to $220-240 per tonne, from $240-250 per tonne on May 12.

A wave of defaults on chrome ore purchases in recent weeks, caused by sharp drops taking place after contracts were signed, has led to further wrangling over prices.

“There are some default issues happening in the chrome ore market due to sudden, sharp price drops. Sellers and buyers are arguing about how much buyers should finally pay,” a major Chinese chrome ore trader told Metal Bulletin.

The bearish sentiment in China continued to spread elsewhere in Asia as prices for high-carbon ferro-chrome, cif Japan dropped to $1.05-1.1 per lb on Thursday May 18, down from $1.1-1.17 the previous week.

Trading in the Japanese market was thin as most market participants waited on the sidelines.

Prices for spot high carbon ferro-chrome, cif South Korea fell to $1.01-1.05 per lb cif South Korea on Thursday, from $1.10-1.15 per lb previously.

In the USA, prices moved for the first time in two weeks, in thin trading.

Metal Bulletin sister publication AMM’s price quotation for spot high carbon ferro-chrome, in warehouse Pittsburgh, narrowed to $1.42-$1.47 per lb on May 18, from $1.42-$1.49 per lb previously.

Market uncertainty and the plummeting chrome ore and ferro-chrome prices elsewhere over the past few weeks have turned sentiment in the USA cautious.
“Business is definitely a little slower because people are hoping to see how the market shakes out in light of the nosedive in Chinese prices and in ore prices,” a supplier source told AMM.

Market participants in the USA agreed prices would remain under pressure in the region, but debated how fast the pace of decline was likely to be.

“It is a virtual certainty that US prices will have to correct downward, but there is a lot of uncertainty regarding when that ripple effect will actually reach this market,” a second supplier source said to AMM.

Tight, well-controlled regional supply should delay the expected downturn, as options for buyers remain limited, market participants said.

”A strange dynamic is developing where no one will bring over excess material since they know pricing will fall, but this approach is fostering a tighter market supply which should prolong the elevated prices,” first supplier source added.

In Europe, ferro-chrome prices edged lower for the second week in a row and further losses are expected in the coming weeks, due to the lower chrome ore prices and a drop in demand from consumers.

Metal Bulletin’s price quotation for high-carbon ferro-chrome fell 2 cents at the high end of its trading range to $1.30-1.40 per lb on a delivered basis in Europe.

Steelmakers in Europe are cutting production and do not want spot feed supplies at present, market participants said.

“Steelmakers have started to destock and are expected to be off 5-10% to 80% of their respective production capacities in June, for third quarter smelting schedules,” one ferro-chrome supplier told Metal Bulletin.

Others held out more hope for prices of their product, citing balanced global high carbon ferro-chrome supply and demand, particularly in Europe.

A second supplier said the lack of consumer interest was due to third quarter negotiations not having started yet.

“Since most of the consumers are not yet in the market for third quarter requirements, the amount of transactions are also naturally limited,” another supplier said.

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