GLOBAL CHROME WRAP: Spot prices dip in China; supply increases expected

Spot high-carbon ferro-chrome prices dipped in China on Friday July 14 on expectations that the recent month-long rally will prompt a supply surge.

  • Domestic and imported prices weaken in China’s spot market
  • Contract prices firm in line with tender prices
  • UG2 prices dip as Turkish ore prices advance
  • Europe prices hold amid subdued consumer demand
  • US prices edge up as suppliers stand firm

Metal Bulletin’s price quotation for Chinese domestic ferro-chrome in the spot market edged down to 7,000-7,400 per tonne on Friday, from 7,000-7,500 per tonne previously.

The domestic price is equal to 80-85 cents per lb.

Meanwhile, contract prices inched higher, catching up with the sharp increase in mills’ tender prices earlier in July. Metal Bulletin’s price quotation for Chinese domestic ferro-chrome on contracts rose 100 yuan at the low end of its trading range to 6,800-7,000 yuan per tonne. 

The rebound in ferro-chrome prices since June means domestic capacity that had been loss-making at lower numbers is likely to be brought back online, according to sources in China.

“With the ferro-chrome price rebounding to 7,000 yuan per tonne, some capacity in Guizhou province will resume,” a ferro-chrome buyer from a stainless steel mill in eastern China told Metal Bulletin.

A similar effect was seen in the spot market for imported cargoes. Metal Bulletin’s charge chrome index, cif Shanghai fell to 83 cents per lb on Friday, from 85 cents per lb previously.

Imports into China have increased due to the stability of overseas supply, compared with domestic, and the similarity in prices, which has left some imported cargoes cheaper than domestic, sources said.

This is likely to further undermine spot prices for both domestic and imported material, sources warned.

Meanwhile, the recent uptick in stainless steel prices may not be sustainable, raising the threat of additional downward pressure on ferro-chrome prices, sources said.

After late July, it will be clear whether a rumoured increase in orders placed in late June represents a real increase in stainless supply to meet increased demand.

“It is very hard to say stainless steel prices will go on rising in the following weeks. July 20 will be the time to check whether stainless steel supply will increase,” Kaiwei Lin, senior analyst at Galaxy Futures, said.

Further upstream, UG2 chrome ore prices dipped amid thin trading.

Metal Bulletin reported last week that traders who had made fortunes squeezing the manganese ore market have accumulated at least 500,000 tonnes of chrome ore in China and are planning to squeeze the market. 

Metal Bulletin’s UG2 chrome ore index, cif China dropped $2 to $169 per tonne, but is still up 22.5% over the past month.

“Miners’ UG2 supply for August delivery to China has almost sold out since Chinese main stainless steel mills released their ferro-chrome tender prices for July,” a major ferro-chrome and chrome trader in Tianjin said. 

Metal Bulletin’s price quotation for Turkish lumpy chrome ore (40-42% Cr) rose to $260-280 per tonne, cfr China, up $10 at each end of its trading range.

Strong demand meets tight supply in Asia
Elsewhere in Asia, spot prices firmed in South Korea due to increased demand and tight supply. 

Metal Bulletin assessed spot high-carbon ferro-chrome, cif South Korea at 81-87 cents per lb on Thursday July 13, up from 80-85 cents the previous week.

“The price in South Korea is rising; we can no longer find any cargo at around $0.80 [per lb],” a major trader in Seoul told Metal Bulletin.

A second trader in Seoul reported that most offers were close to 90 cents per lb.

Meanwhile, Metal Bulletin’s high-carbon ferro-chrome price cif Japan was assessed at 85-90 cents per lb, unchanged for the fourth consecutive week.

EU prices steady, US prices rise
In Europe, spot high-carbon ferro-chrome prices remained steady as producers insisted on a price floor at $1.10 per lb, in line with the third-quarter ferro-chrome benchmark settlement figure

Metal Bulletin’s price quotation for high-carbon ferro-chrome held at $1.10-1.18 per lb, delivered in Europe, on Friday July 14. 

Spot consumer demand across Europe was subdued, but ferro-chrome producers said they have no need to drop their prices.

“The majority of European buyers are covered for the time being and there is no interest on the consumer side to build up stocks before the end of August. Producers have well-balanced stock levels and no need to sell at cheap prices into the trade to liquidate stocks,” a ferro-chrome producer source told Metal Bulletin.

There is scope for higher offer prices in the near term, sources said, citing a rage of factors including higher chrome ore prices, recent alloy strength in China and limited stainless steel scrap availability.

In the USA, high-carbon ferro-chrome prices continued to trade at a significant premium to other global markets last week. 

High-carbon ferro-chrome prices, in-warehouse Pittsburgh rose to $1.38-1.47 per lb on July 13, up 2 cents at the high end of the range, according to Metal Bulletin sister publication AMM’s latest assessment. 

“Everyone is holding their breath, trying to wait out the market if they can, while price levels sit at dramatic premiums to those outside the USA,” a market source told AMM.

Slow trading has had little effect on prices and, like those in Europe, suppliers said they have no intention of selling into the trade at lower prices.

“With the higher grades being protected to a degree, none of the major suppliers are in an eager mood to disrupt this market. They are not going to sell into the trade at lower numbers to undermine these prices,” a supplier source told AMM.

Metal Bulletin ferro-chrome, chrome prices

Rena Gu

rena.gu@metalbulletinasia.com

Janie Davies

jdavies@metalbulletin.com

Ellie Wang

ellie.wang@metalbulletinasia.com

Chris Kavanagh

christopher.kavanagh@amm.com

Declan Conway

declan.conway@metalbulletin.com

Published

Rena Gu

Janie Davies

Ellie Wang

Chris Kavanagh

Declan Conway

July 17, 2017

11:22 GMT

Shanghai, Singapore, Galway, New York, London