PRICING NOTICE: Proposal to amend low-carbon ferro-chrome Europe specification
Following extensive market engagement, Metal Bulletin proposes changes to the specification of 0.10% C low-carbon ferro-chrome Europe price specification to narrow the range of chromium content to 65-70%.
At present, Metal Bulletin considers all price points for low-carbon ferro-chrome with a carbon and chromium content of 0.10% and 60-70% chrome respectively into the existing low-carbon ferro-chrome (0.10% C avg 60-64.9% Cr) delivered consumer works Europe $ per lb Cr price.
From September 2017 to June 2018, the average spread in the high and low end of the price range was $0.14 per lb. Over the 10 months up to September 2017, the spread had averaged $0.09 per lb.
Some market participants felt that the divergence in the spread has resulted in the price becoming less representative. In response, a public consultation was launched to look into replacing the existing price with two prices, according to their chromium content.
A clear relationship was drawn between chromium content and price. In addition, market fundamentals suggest products with different chromium content should be treated separately. However, it should be pointed out that this perspective was not shared by all respondents.
Metal Bulletin had proposed to split the existing price into lower and higher chromium content products, specifically 60-64.9% and 65-70% and initially invited feedback in a pricing notice on July 5. Consultation into this proposal was extended for a further month on August 6.
Feedback from this market consultation showed mills can choose to buy material with lower chromium content than 65% but have to add more material or blend in other material. The higher cost of 65%+ material is reflected in higher costs of production.
Additionally, responses from market participants showed support for the pricing of higher chromium content (65-70% Cr), which is also more liquid. However, there was little support for a low chromium price (60-64.9% Cr), neither was there evidence forthcoming that there would be sufficient liquidity to support this price.
As a result, Metal Bulletin suggests dropping its original proposal to have two low-carbon ferro-chrome products (0.10% C). Instead, Metal Bulletin proposes to offer only offer the higher chromium content price.
Market feedback suggests a price with a 65-70% Cr content could be offered without considerable loss of liquidity. Use of the narrower range of chromium would more clearly define what product has been priced.
In addition, it would make the price more focused on trades because it would rule out data points for the relatively illiquid lower Cr material, which tend to be bids or assessments. Analysis has shown that reported trades are much more likely to be related to the higher than lower Cr material.
The possible new product has raised some concerns that it would favor producers. To address a similar situation in other markets, Metal Bulletin has developed policies to ensure its prices are not unfairly dominated by a limited number of buyer or sellers.
Data points would continue to be collected from sources across the market - buyers, sellers and traders. In addition, Metal Bulletin would encourage all market participants to participate in the pricing process so that the most representative and accurate price can be arrived upon.
Metal Bulletin is aware that the 0.06% C low carbon ferro-chrome product tends to be priced in relation to the 0.10% product. The 0.06% price is already assessed using data points related to 65% Cr. No changes are anticipated to be made to this specification at this stage but we will continue to monitor the situation.
Metal Bulletin would like to thank all participants who have responded to previous low carbon ferro-chrome consultations. Participants active in the market are invited to provide feedback on whether 0.10% carbon ferro-chrome with a 65-70% range would have sufficient liquidity and with any comments they have on the proposal.
Subject to the results of the consultation, the existing price will be amended. The price history for the existing product will be applied to the amended product.
There will be no changes to the publishing time and dates of the proposed assessments.
The full specification for the proposed new 0.10% C low-carbon ferro-chrome price, is as follows:
Description: Low-carbon ferro-chrome (0.10% C avg 65-70% Cr) delivered consumer works Europe $/lb Cr
Type: Assessed range
Basis: Delivered consumer works Europe
Unit: lb of chrome contained
Min lot size: 25 tonnes
Payment terms: 30 days, other payment terms normalized
Quality: Cr: 65% basis (range 65-70% Cr); C: 0.10% excluding material up to 0.06% C; Si: 1.5% max; P: 0.05% max; S: 0.05% max
Publication: Fortnightly. Friday between 2pm and 3pm London time
The consultation period for this proposed amendment will end one month from the date of this pricing notice on September 4, with changes taking place from October 5, subject to market feedback.
To provide feedback on this price or if you would like to provide price information by becoming a data submitter to this price, please contact Jon Stibbs and Davide Ghilotti by email at: firstname.lastname@example.org and email@example.com. Please add the subject heading “FAO: Jon Stibbs, Davide Ghilotti, re: Low-carbon ferro-chrome (0.10%)”.
To see all Metal Bulletin’s pricing methodology and specification documents go to www.metalbulletin.com/prices/pricing-methodology