GLOBAL CHROME WRAP: S Korea, Japan ferro-chrome prices inch up on higher offers from India

Ferro-chrome prices were higher or stable across USA, European and Chinese markets, while particular strength was noted in South Korea and Japan.

Markets were buoyed by a tightening in supply, as well as a less dramatic decline in the European benchmark than some had expected. 

The European charge and high-carbon ferro-chrome benchmark price dropped 11 cents to $1.54 per lb for the second quarter of 2017.

The settlement was announced to the Johannesburg Stock Exchange on Wednesday March 15 by leading South African ferro-chrome producer Merafe Resources, which operates a joint venture ferro-chrome project with Glencore.

At the start of March, most market participants polled by Metal Bulletin said they expected a 10-15 cent reduction in the benchmark price, reflecting the decline in global spot prices since the first quarter price soared 55 cents to $1.65 per lb.

The 6.7% reduction in the benchmark – compared with early predictions of as much as 12% – reflects a notable tightening of ferro-chrome supply towards the end of the first quarter.

Metal Bulletin’s ferro-chrome benchmark indicator predicted a second quarter price of $1.48 per lb on March 10, up from $1.47 on March 3, when the prediction dropped from an initial $1.50 per lb, based on the newest available data.

Using the new data available when the second-quarter settlement was reported, the Metal Bulletin index team analysed the reasons for the disparity.

As Metal Bulletin stated since the Indicator was launched, the Indicator’s algorithms improve automatically from its errors. You can find out more about the disparity and how the index adapts, here.

Chinese prices flat
Chinese domestic ferro-chrome prices, meanwhile, held firm ahead of new tender prices.

Producers were mostly unwilling to sell last week, as they anticipated higher tender prices. 

Contract prices for Chinese domestic high-carbon ferro-chrome with 6-8% carbon, and 50% chrome, delivered duty paid, remained stable week-on-week at 9,300-9,595 yuan ($1,348-1,391) per tonne on Friday March 17.

Market participants were expecting major Chinese stainless steel mills to request cargoes this week. Tender prices are very likely to be released next week, sources said.

Spot prices for Chinese domestic high-carbon ferro-chrome, delivered duty paid, were unchanged week-on-week at 9,700-10,300 yuan per tonne. 

There were limited Chinese ferro-chrome imports last week, with cargoes offered sporadically. Chinese sources said Indian cargoes had been sold at 110 cents per lb.

Some Zimbabwean cargoes were heard offered at 110 cents per lb, but no South African cargoes prices were heard in China.

Metal Bulletin’s charge chrome index, cif Shanghai, which tracks South African imports to China, held at $1.14 per lb, also on Friday. 

Strength in Asia
Ferro-chrome prices in Japan and South Korea, meanwhile, both increased last week as Indian suppliers further raised offers on rising prices in China. Metal Bulletin assessed cif Japan 60% chrome ferro-chrome at $1.16-1.20 per lb on Friday, up from $1.15-1.19 a week earlier. South Korean numbers inched up to $1.11-1.15 from $1.09-1.12 a week earlier. 

Indian sellers also confirmed that they concluded deals to China at $1.10 per lb cif China, and have subsequently raised their offers to $1.15 per lb. This week, they also sold cargoes to Europe at $1.10 per lb fob Indian.

“Offers are all going up this week. There’s no offer cheaper than $1.10 [per lb cif South Korea] now. The normal offer level is $1.13-1.15 [per lb cif South Korea],” a major trader said in Seoul.

A second trader echoed these sentiments, but had managed to purchase a small volume of cargo at $1.11 cif South Korea on Thursday.

There were no major tenders in South Korea last week, although there was talk that Posco may soon start its next quarter purchases.

Similarly, activity in Japan was limited, as most buyers in the region thought the current offers were too high to accept.

Offers reported by traders were in a range of $1.17-1.21 per lb cif Japan this week. One deal of about 500 tonnes was concluded at about $1.16-1.17 per lb cif Japan.

“The price is going up, but the increase is very small and the market is not active. Only very small deals can be heard in the market now,” one major trader said in Tokyo.

US numbers still firm
The US high-carbon ferro-chrome market also maintained strength last week, despite a similar lack of significant spot market activity.

Spot prices for US high-carbon ferro-chrome edged up to $1.40-1.49 per lb on March 16, up marginally on the high end from $1.40-1.48 per lb previously.

Although spot market activity has been lacklustre, prices have been able to remain firm.

“The market is still rather quiet on the spot, but the fact is they don’t need material because they are well covered on contracts,” a supplier source told Metal Bulletin sister title AMM. “Contract business continues to stay relatively strong.”

Improved production activity at steel mills has led to increased consumption, effectively tightening the market to support prices.

“Demand and production coming out of the mills continue to stay quite steady and if anything, it is bumping up a bit,” a second supplier source told AMM.

“Shipments and releases are tending to be slightly higher than February shipments. They are looking anywhere between 5% and 10% higher right now,” he added.

While mills continue to consume material at increasingly healthy rates, a consolidated supply has similarly provided support for pricing.

“There is not much material available sitting in the USA, and I don’t think traders will bring material in right now,” a third supplier source explained. “With numbers firming up overseas, and spot market activity limited, there is very little incentive for traders to bring in material.

“Pricing should hold very firm, unless we see more cheap or lower grade imports flood the market,” a fourth supplier agreed. “But I think because of limited spot demand no one will bring a significant tonnage.”

The supply consolidation has allowed a price floor to emerge in recent weeks, as market participants have refrained from dipping below the $1.40 per lb mark on spot transactions.

“The market has a clear floor right now. No one is selling below $1.40 [per lb],” the first supplier explained.

“I don’t see anyone offering below $1.40 [per lb],” the fourth supplier source agreed.

Despite the recent settlement of the higher-than-expected European ferro-chrome benchmark price for the second quarter, market participants did not expect much of an effect on pricing in the US market.

“It is too soon to tell what kind of an impact the new benchmark will have, but not much I assume,” the fourth supplier source told AMM.

“I think that the benchmark is already priced in to the current market levels. It shouldn’t be much of a market mover,” the third supplier source added.

European high-carbon numbers stable 
European high-carbon numbers were steady last week, after climbing a week earlier. High-carbon ferro-chrome held in the wide range of $1.27-1.42 per lb, and material changed hands in an even wider range. 

European tender sales are understood to have taken place at the low end of the range, while a buyer confirmed purchasing just below this level.

“We have seen an auction result of $1.285 per lb Cr for 75 tonnes of 65% chrome […] in Germany,” one market source in Europe said.

However, large volumes of good grade material also changed hands at the upper end of the range and above. While trade was light, sellers were considering raising prices in the week ahead.

“It’s a dry trade. I’m going to increase bottom prices in the coming week, basis this week’s performance,” one seller said on Friday.

High-carbon price strength has lagged in comparison to low-carbon prices, according to a trader, who noted that demand for low-carbon was still soaring last week.

Low-carbon ferro-chrome is assessed on a fortnightly basis by Metal Bulletin, so no new assessment took place on Friday. A week ago, though, Metal Bulletin reported that low-carbon ferro-chrome prices in Europe have gathered strength in recent weeks as availability has tightened due to increased demand in China, where production costs have been high, sources told Metal Bulletin.

Chrome ore
High chrome ore inventory in South Africa continued to weigh on UG2 chrome ore prices last week.

Metal Bulletin’s recently-launched chrome ore index, which replaced its UG2 assessment on March 10, was calculated at $370 per tonne cif, down from $372 a week earlier.

Most chrome ore offers were heard at $370 per tonne, but Chinese sources said deals may have been concluded below $370 per tonne as miners were eager to sell amid high inventory at South African ports.

“Chinese ferro-chrome producers are waiting for a new round of ferro-chrome tender prices from Chinese stainless steel mills. They did not purchase chrome ore actively this week. We will wait until after the Asian Ferro-alloys conference or wait for new tender prices to be released, then decide,” a main Chinese ferro-chrome producer said.

The Metal Bulletin Asian Ferro-Alloy Conference is taking place this week in Hong Kong. Metal Bulletin will be reporting from the event.

Turkish chrome ore prices, by contrast, were slightly higher last week, as sellers in Turkey held their offers firm. 40-42% Turkish lumpy reached $380-410 per tonne cfr main Chinese ports, up from $375-405 a week earlier. 

“42-44% concentrate was sold at $400 [per tonne] this week. $375 is too low for Turkish lumpy. It’s closer to around $400-410. I am asking $420 for the same,” one seller said.