Weak Chinese alloys markets, strong bulk ores markets expected post-Lunar New Year

The market for downstream ferro-alloys — including ferro-chrome, silicon-manganese, ferro-manganese, ferro-silicon and vanadium — should remain weak after the Lunar New Year due to oversupply, sources told Fastmarkets. But the market for alloy ores, such as chrome ore, manganese ore and tungsten concentrates, should remain with stronger fundamentals after the February 10-17 holiday, sources said.

Chrome ore vs ferro-chrome

Robust demand and tight supply in the chrome ore seaborne market will remain even after the Lunar New Year, giving support to prices, market participants said.

“Even though China’s December chrome ore imports reached a monthly record high, port stocks of commercially tradeable materials remain low,” one international chrome ore supplier told Fastmarkets.

“After the Lunar New Year holiday, strong fundamentals will continue, given the high capacity utilization rate in Chinese smelters,” the supplier said.

According to China’s customs data, the country imported 1,996,209 tonnes of chrome ore in December, a record high in monthly imports, up by 10% month on month and by 52% year on year.

Chrome ore is smelted into ferro-chrome, which is mostly used in the production of anti-oxidation and corrosion-resistant stainless steel.

One Chinese ferro-chrome trader source told Fastmarkets that the ferro-chrome output in January should be around 0.7 million tonnes and will likely remain at this level in February.

“High ferro-chrome production rates support the chrome ore market,” the trader source said. “However, it will result in a weak ferro-chrome market, with tepid demand from stainless steel mills.”

Due to new capacity coming online, ferro-chrome supplies in China — especially in Inner Mongolia, a ferro-chrome production hub — are high, the trader source added.

“It is hard to say in which direction the market will go,” a ferro-chrome smelter in northern China said. “It will be determined by stainless steel prices after the [Lunar New Year] holiday.”

Taiyuan Iron and Steel Company (TISCO), a key stainless steelmaker in China, announced on Tuesday January 23 that it would roll over its January ferro-chrome tender price, which has been 8,295 yuan ($1,155) per tonne since December.

Manganese ore vs silicon-manganese, ferro-manganese

Manganese ore supply to China was high throughout most of 2023; Fastmarkets’ manganese ore 44% and 37% price indices fell in the same period.

But prices have increased since late December due to increased restocking by Chinese manganese alloy smelters, along with decreasing port stocks and potential supply reductions from South African miners.

“The fundamentals of the manganese ore market have improved,” one manganese ore seller source said, “and this may remain after the Lunar New Year holiday, with smelters coming back from the long holiday to replenish ore stocks.”

Fastmarkets’ assessments of manganese ore stocks at Qinzhou and Tianjin ports were in the range of 4.80-5.05 million tonnes on Monday January 22, compared with 5.08-5.27 million tonnes on January 15, with stocks dropping for five weeks in a row.

Manganese ore is smelted to manganese alloys, including silicon-manganese — which is an important raw material during the production of construction steel products — and ferro-manganese, which is added during flat steel production.

The Chinese manganese alloy market remained weak, with lingering oversupply and poor performance in end-use industries, according to sources.

“Without massive production cuts in manganese alloys, the silicon-manganese market will be weak after the [Lunar New Year] holiday,” a manganese alloy trader source in China told Fastmarkets.

A manganese smelter source said that bearish sentiment in the manganese alloy market will remain in February, adding that “with poor performance in the property sector, demand for long steel will hardly rise after the Lunar New Year; in other words, demand for silicon-manganese will be reined in.”

Unlike in the silicon-manganese market, “the ferro-manganese market should be relatively stable before and after the holiday because of firm demand from its end users, such as the automotive and shipbuilding industries,” a second manganese smelter source said.

Tungsten vs vanadium, ferro-silicon

The market for upstream tungsten concentrates will likely continue with bullish fundamentals because of potential production cuts during the Lunar New Year holiday, sources said.

Some Chinese producers of tungsten concentrates might cut production due to maintenances and checks in their facilities during the holiday, sources added.

A tungsten trader said that tighter spot availability is expected to support spot prices after the Lunar New Year, although there should be no obvious improvements in the mainstream downstream demand from the hard-alloys sector after the holiday.

“The market for tungsten concentrates has been tight for quite some time, especially for higher-grade tungsten concentrates,” a second tungsten trader said. “I hear there will be some tungsten concentrates production cuts from mid-January to the end of February — this could exacerbate the already tight spot availability.”

The overall Chinese ferro-silicon market may remain oversupplied after the Lunar New Year holiday, sources said.

“Most ferro-silicon is used in the steelmaking industry. So far, we do not see signs of recovery in the real estate industry,” a China-based ferro-silicon trader said. “Housing prices in first-tier cities such as Beijing, Shanghai and Guangzhou have declined by several million yuan; most people still take a watchful attitude in purchasing houses.”

Sources said that the price for Chinese vanadium will rise only if vanadium battery technologies progress after the Lunar New Year, resulting in more vanadium demand; otherwise, vanadium should maintain a weak momentum.

“It is unlikely that the vanadium price will rise after the Lunar New Year, given current sluggish downstream steel demand, unless vanadium battery projects are installed and applied on a larger and wider scale — which would, to some extent, drive up upstream vanadium demand,” a China-based vanadium trader source said.

Don’t miss the chance to grow your network and connect with Asia’s most influential decision-makers from across the ferroalloys supply chain in Hong Kong at Fastmarkets Ferroalloys Asian Conference 2024 on February 26-28, 2024. Register now

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