RESEARCH: Key takeaways from the latest Ferro-alloys Market Tracker

This month’s key ferro-alloy forecast highlights:

• Numerous ore and alloy markets enjoyed upward pricing momentum in the first half 2020, with supply-side constraints supporting prices despite collapsing demand from steelmakers and other key end users. While supply side issues related to Covid-19 lockdowns have been resolved, ore and alloy prices have retreated. Low prices are now prompting alloy suppliers to take renewed steps to reinvigorate markets. We are seeing production cuts in several markets, including ferro-silicon, manganese alloys, and ferro-chrome, while US silicon metal producers are targeting unfair trade with a new trade case filing.
• Despite continued low steel mill operating rates in Europe in particular, due to decline further in the near term with summer holiday outages, we suspect reduced supply will help alloy prices to find a floor in most markets during the third quarter of 2020.
• Although the recent rollover of quarterly charge chrome contract prices may suggest stability in global chrome markets, spot market movements indicate otherwise. The market showing most volatility over recent months has been that for chrome ore, triggered by shortages of South African material during the country’s lockdown, but chrome ore supplies have now begun to return to markets.
  In the absence of much demand, ore prices have subsequently given up most previous gains. Chinese ferro-chrome smelters appear to have enough stocks of ore on hand or access to domestic stocks. Ferro-chrome demand from stainless steelmakers remains subdued, particularly from producers outside of China, and a seasonal slowdown looks inescapable in the large European market. We expect charge chrome contract prices to follow ferro-chrome spot market prices lower once the fourth quarter arrives.
• We expect to see vanadium prices trend stable to higher in the near term in the major markets. Although European demand will remain subdued through August for holiday closures, we expect steelmakers to slowly ramp up capacity from September, gradually increasing demand for vanadium, and lending pricing support against reduced inventories. Continued expansion in Chinese steel production, together with price competitiveness via substitute products, will also support vanadium prices in the near term.

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