Open consultation on Fastmarkets’ European low carbon FeCr methodology

This consultation, which will be open until January 9, 2023, seeks to ensure that our methodologies continue to reflect the physical market under indexation, in compliance with the International Organization of Securities Commissions (IOSCO) principles for Price Reporting Agencies (PRAs). This includes all elements of our pricing process, our price specifications and publication frequency.

You can find the current methodology for European low-carbon ferro-chrome pricing at https://www.fastmarkets.com/methodology.

Specifically, Fastmarkets is seeking feedback on:
• The possible introduction of a new price covering low-carbon ferro-chrome with lower chrome content
• Adjusting the specification of its fortnightly ferro-chrome 0.10% C, average 65-70% Cr, delivered Europe, quotation to reflect more commonly requested impurity levels
• Discontinuing the fortnightly quotation for ferro-chrome, low carbon, 65% Cr, max 0.06% C, delivered Europe.

Across ferro-chrome markets in general, over the course of 2022, there have been various changes to the low-carbon ferro-chrome landscape in Europe, beginning with the Russian invasion of Ukraine, which led to a spike in input costs, especially for energy.

In the 0.1% carbon market in particular, there has also been an influx of cheaper material, reported to be mainly of Chinese origin but also possibly of Indian origin. This led to disagreement among some market participants over whether it should be included in Fastmarkets’ existing price quotation for ferro-chrome 0.10% C, average 65-70% Cr, delivered Europe.

Some argued that it was not reliably above 65% chrome content, along with other doubts about quality, while others said that it was essentially the same product as material of other origins, with no reason for exclusion on a chemical basis.

Until recently, this cheaper material represented only a small section of data reported from the spot market, meaning it was not considered reflective of the open and competitive market. But this has now changed, with an increase in data points reported by a variety of market participants on both the buy and sell sides.

At the same time, some market participants have begun to report that there are now more transactions for material with lower chrome content but otherwise with the same impurity levels as the existing 0.1% carbon quotation.

Fastmarkets’ existing quotation does not include material with lower chrome content, because the current specification does not allow for this, and preliminary discussions suggest that a separate quotation to encompass this may be needed.

New 0.1% carbon quotation proposal
Fastmarkets therefore proposes the introduction of an assessed price range, using the same methodology as the existing quotation.

The suggested specification and other terms are:

Ferro-chrome low carbon, 0.10% C, basis 58-64.9% Cr, CIF Europe, $ per lb Cr
Quality: Lump, Cr 58-64.9%, C 0.10%, Si 1.5% max, P 0.03% max, S 0.03% max
Quantity: Min 25 tonnes
Location: CIF Europe
Unit: USD per lb of chrome contained
Payment terms: 30 days, other payment terms normalized
Publication: Fortnightly, Tuesday, 2-3pm London time.

Fastmarkets is interested in finding out whether this would be welcome and whether any amendments should be made – for example, incoterms and chrome and/or impurity content in the proposed new low-carbon price.

These specifications are subject to change based on market feedback, including, but not limited to, incoterms, frequency of publication, chrome content and other impurities.

Proposed changes to impurity levels
During other conversations, it has also emerged that some changes may be needed elsewhere, with sources reporting that the maximum sulfur and phosphorus content of low-carbon ferro-chrome should be 0.03%, as opposed to 0.05% maximum, as per Fastmarkets’ current specification for ferro-chrome 0.10% C, average 65-70% Cr, delivered Europe.

This proposal suggests keeping this quotation almost exactly the same, but reducing the maximum tolerances for sulphur and phosphorus to 0.03%, as highlighted below in italics:

MB-FEC-0003 Ferro-chrome, 0.10% C, average 65-70% Cr, delivered Europe, $ per lb Cr
Quality: Lump, Cr 65% basis (range 65-70% Cr), C 0.10% excluding material up to 0.06% C, Si 1.5% max, P 0.03% max, S 0.03% max
Quantity: Min 25 tonnes
Location: Delivered consumer works Europe
Unit: USD per lb of chrome contained
Payment terms: 30 days, other payment terms normalized
Publication: Fortnightly, Tuesday 2-3pm London time.

Proposed discontinuation of ferro-chrome low carbon, 65% Cr, max 0.06% C, delivered Europe price
Last, the price for ferro-chrome, low carbon, 65% Cr, max 0.06% C, delivered Europe, has generally been extremely illiquid for some time, with data only rarely reported, and market participants have suggested that it is no longer needed.

Fastmarkets therefore proposes to discontinue the following price, as of an agreed date after the end of the consultation period:

MB-FEC-0002 Ferro-chrome low carbon, 65% Cr, max 0.06% C, delivered Europe, $ per lb Cr
Quality: Lump, Cr 65% basis (range 60-70% Cr), C 0.06% max, Si 1.5% max, P 0.05% max, S 0.05% max
Quantity: Min 25 tonnes
Location: Delivered consumer works Europe
Unit: USD per lb of chrome contained
Payment terms: 30 days, other payment terms normalized
Publication: Fortnightly, Tuesday, between 2pm and 3pm London time.

Consultation period
This six-week open consultation begins on Monday November 28 and will close on Monday January 9. Fastmarkets may choose to implement some, all or none of these suggestions. In addition, we are open to discussions on other possible changes to our European ferro-chrome prices.

Please send responses in writing, preferably in electronic format, to pricing@fastmarkets.com. Please add the subject heading ‘FAO: Claire Patel-Campbell re low carbon ferro-chrome pricing.’ Please specify whether your response is confidential. Opinions offered in confidential responses may be referenced but will not be attributed in any way.

Fastmarkets will publish the outcome of this consultation by January 16, 2023, including a summary of the feedback – with the exception of those responses marked as confidential.

To see all Fastmarkets’ pricing methodology and specification documents go to https://www.fastmarkets.com/methodology.