UG2 chrome ore prices up on improved buyer sentiment

The UG2 chrome ore market ticked up for the first time since March of this year in response to increased buyer interest over the week to Tuesday May 11, sources said.

Fastmarkets’ chrome ore South Africa UG2 concentrates index basis 42%, cif China price assessment was $150 per tonne on May 11, a rise of $1 (0.67%) from $149 per tonne a week earlier.

“The number of inquiries we received was the highest for three months,” a chrome ore seller said. “Market fundamentals haven’t really changed but market sentiment strengthened due to the bullish downstream steel sector and concerns over seaborne shipments amid volatile freight rates.”

Similarly, the portside chrome ore market also firmed on renewed demand from smelters, sources said.

Traders reported deals to Fastmarkets at 26.50 yuan ($4.13) per dry metric tonne unit (dmtu), up from 26 yuan per dmtu in late April.

“Smelters were happy to replenish their available feedstock from the port markets given that prices are lower there than in the seaborne market,” one chrome ore trader source said.

Additionally, high chrome-ore consumption rates among smelters have resulted in a decline in port stocks, which also strengthened participants’ market confidence.

Fastmarkets assessed chrome ore inventories at the main ports of Tianjin, Qinzhou, Lianyungang and Shanghai at 3.12-3.49 million tonnes on May 10, down by 2.1% from 3.18-3.57 million tonnes a week earlier.

Imported charge chrome market stable
The market for imported ferro-chrome remained stable with producers resistant to lowering their offer prices while high costs support the current level.

Fastmarkets’ ferro-chrome 50% Cr import, cif main Chinese ports price assessment was stable at 94 cents per Ib contained Cr for the third consecutive week on Tuesday.

Pressure may also mount on producers to accept lower prices in response to Indian ferro-chrome producers dropping their offer prices, Fastmarkets heard.

Some market participants, however, denied this would have a meaningful impression on the charge chrome market.

“Unlike Indian suppliers, charge chrome producers are not under such pressure to sell. And prices may well be supported by production costs in South Africa due to higher power rates in winter and the appreciation of the rand,” a ferro-chrome producer said.

Domestic spot alloy prices fall
The domestic ferro-chrome market continued its downward price trend but there were some indications that it may have bottomed-out, sources said.

Fastmarkets’ price assessment for ferro-chrome, spot, 6-8% C, basis 50% Cr, ddp China was 7,200-7,500 yuan per tonne on Tuesday, down by 100 yuan (1.3%) from 7,300-7,600 yuan per tonne the week before.

Some market participants that spoke to Fastmarkets said they believe increased supply could continue to weigh on prices.

“Total production in April already returned to its normal level at around 500,000 tonnes,” a second ferro-chrome trader source said. “With a number of furnaces ready to start in May, the mounting supply is going to drag prices down a little further.”

Despite the price drop over the past session, rising raw material costs and stainless-steel prices could support the alloy market to move higher in the near term.

“Coal prices have been on a continued uptrend, which has led to increased production costs for smelters and stainless steel prices have jumped so there’s no reason for mills to give smelters a hard time,” a ferro-chrome trader source said.

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