UG2/MG chrome ore price jumps $17/t to 44-month high

The UG2/MG chrome ore breached $200 per tonne on Tuesday February 15, its highest since July 2018. This bullishness was driven by lower inventories in China, strong consumption and a bright downstream outlook, sources told Fastmarkets.

Fastmarkets’ calculation of the chrome ore South Africa UG2/MG concentrates index, cif China was at $202 per tonne on February 15, up by $17 per tonne ($9.19%) from $185 per tonne the previous week.

Following a surge in deal prices for chrome ore with higher chrome to iron ratio, UG2 and MG chrome ore suppliers hiked their offer prices to $210 per tonne and expect positive responses from buyers in the following days.

“The chrome ore market is flying with offer prices at $205-210 per tonne, port stocks down and stainless steel prices up – it’s all looking good,” a trader said.

The higher prices have sparked varying buyer reactions.

“Such a dramatic rise is unexpected, we’d rely on our stocks now and see if this frenzy trend will last,” a ferro-chrome producer source in southern China said.

But producers in Inner Mongolia, where production has been strong since the fourth quarter of 2021, will have to make purchases, participants said.

“Unlike in the past when about three million chrome ore stocks sit at ports and buyers could take time to negotiate for a better price, the stocks in the past few months have decreased significantly, which gives sellers an upper hand in price settlement,” a second trader said.

Fastmarkets assessed chrome ore inventories at the main ports of Tianjin, Qinzhou, Lianyungang, and Shanghai at 2.06-2.23 million tonnes on Monday February 14, down by 0.2% from 2.14-2.16 million tonnes on February 7.

“Alloy production in China has been very high, while inventories have fallen and exports from South Africa have been disrupted,” an ore producer said.

“The ore market is now undersupplied and we are now seeing these prices rises drive the alloy market,” the source said. “I expect this will be the situation for some time to come.”

Ferro-chrome markets supported
The elevated raw material costs have supported ferro-chrome markets.

Suppliers attempted to increase offers in the spot market, citing increased production costs, although buying has been tepid in the past week.

Fastmarkets’ weekly price assessment of ferro-chrome spot 6-8% C, basis 50% Cr, ddp China moved up 50-100 yuan per tonne (+0.87%) to 8,550-8,900 yuan ($1,347-1,402) per tonne on Tuesday, from 8,500-8,800 yuan per tonne a week earlier.

In addition, strengthening stainless steel prices have also buoyed market confidence, sources said.

“Rising stainless steel prices amid the nickel price uptrend have [helped] downstream business; sentiment for both domestic and imported ferro-chrome remains firm even with high alloy production rates,” an international ferro-chrome producer source said.

Fastmarkets’ weekly price assessment of ferro-chrome 50% Cr import, cif main Chinese ports rose to $1.10 per lb contained Cr on Tuesday, up by $0.02 per lb (+1.85%) from $1.08 per lb contained Cr the previous week.

But spot liquidity was light, with an absence of movement on the seller side. A second international ferro-chrome producer source told Fastmarkets that they were waiting for more indications of the market, such as the upcoming tender price.

Participants in China broadly expected major stainless steel mills to moderately increase their March tender price for high-carbon ferro-chrome, possibly by 200-300 yuan per tonne.

“There are buyers seeking to take a position in the current market indicating they expect prices to rise further,” a market participant said. “While prices were expected to rise after the holiday, the speed of the recovery was a surprise.”

“Because the market was over-supplied, consumers had got complacent about supply,” the source said.