GLOBAL CHROME WRAP: China weakens again, drags down other Asian markets; US market ticks higher

The downward trend in Chinese ferro-chrome and UG2 prices persisted last week, taking other Asian markets with it while ample supplies against slow buying interest weighed on markets.

  • Low consumer demand drags on Chinese market 
  • Weaker chrome ore is a further drag 
  • Japan and South Korea track China down 
  • US deals push prices up 
  • Europe high carbon (HC) FeCr cemented in current range 

Spot ferro-chrome and UG2 prices fall further in China
Ferro-chrome prices in China fell on Friday November 10 in line with weaker Chinese stainless steel demand and prices, as well as falling chrome ore prices.

Metal Bulletin’s price assessment for Chinese spot domestic ferro-chrome dropped to 7,400-7,500 yuan per tonne ($1,113.95- 1,129.28) on Friday, from the previous week’s assessment at 7,500-7,800 yuan per tonne.

The latest spot domestic ferro-chrome price is equivalent to $0.86-0.87 per lb from $0.876-0.911 per lb the week before.

China’s domestic stainless steel prices have fallen in the past week while selling offers increased.

Increased stainless steel inventory at Wuxi and Foshan, coupled with falling nickel prices, are putting downward pressure on stainless steel prices.

Metal Bulletin’s assessment of prices for benchmark 304 stainless cold rolled coil was 15,000-15,600 yuan per tonne (including VAT) in the major market of Wuxi for the week ended Thursday November 9, down 400-600 yuan per tonne from a week before.

The three-month nickel price closed at $12,100 per tonne as of Friday November 10, 5% lower from a close of $12,710 per tonne the Friday before.
Metal Bulletin’s latest price assessment for Chinese domestic high-carbon ferro-chrome on contracts stood at 7,700-7,900 yuan per tonne on Friday November 3, rolled over from the week before on November tender prices from major Chinese stainless steel mills.

The latest contract domestic ferro-chrome price is equivalent to $0.90-0.92 per lb from $0.88-0.91 per lb the week before.

According to Metal Bulletin's latest assessed reported data, the charge chrome index cif Shanghai price decreased a cent to $0.99 per lb.

“The charge chrome index fell in line with falling domestic spot ferro-chrome prices, giving stainless steel mills high ferro-chrome stockpiles and as a result lower buying interest, while charge chrome buyers have shown limited interest on overseas cargoes, ” a Shanghai-based charge chrome trader said.

Metal Bulletin’s UG2 chrome ore index cif China dropped $7 to $169 per tonne from $176 per tonne the week before.

Plentiful supplies and lower spot ferro-chrome prices are weighing on chrome ore prices, according to chrome ore traders.

China drags Japan and South Korea down further
In Japan and South Korea, the high-carbon ferro-chrome spot market traded lower in the past week, with cif prices weaker in line with China.

Metal Bulletin’s spot price quotation for the market cif Japan price was assessed at $0.9-0.98 per lb on Thursday November 9, from $0.95-0.99 per lb a week before.

“The market price will fall further due to weak stainless steel demand, particularly in China,” a Japanese trader told Metal Bulletin.

“The price has been on a downtrend recently, but the market is very quiet because Japanese customers are focusing on annual contract negotiations for 2018," a second trader said.

“I can’t say the actual numbers for long-term business, but the discount margin is smaller than before. Suppliers are not being aggressive in trying to sell to Japan because the Chinese and European markets are still healthy," the trader added.

Metal Bulletin’s price assessment for high carbon ferro-chrome, cif South Korea stood at $0.9-0.98 per lb, down from $0.95-1.02 per lb last week.

“The market is very quiet and at $0.94-0.98 per lb from what I heard, and going down," one South Korean trader told Metal Bulletin, adding that a tender for 100 tonnes of alloy is due this week, which should shed light on market price direction.

US spot market edges higher

The US high-carbon ferro-chrome market edged higher after a raft of deals in the past week, although market focus is on long-term delivery settlements.

Spot prices for US high-carbon ferro-chrome edged up to $1.40-1.48 per lb on November 2, up a cent on the top-end of the range from $1.40-1.47 per lb the week before, according to American Metal Market’s latest assessment.

“Everyone is more focused on the long-term contracts,” a supplier source said.

“The (spot) high-carbon ferro-chrome market is still pretty firm. You still need to be in the $1.40’s per lb range to secure material," another supplier source said.

Bullish sentiment has been cemented since the Defense Logistics Agency’s (DLA) announcement last week, which reported deals to trading companies Traxys and Glencore.

“The DLA is one of the only outlets for traders to get material, so the fact that Traxys and Glencore bought it all keeps the material in stronger hands,” a third supplier source said.

European HC ferro-chrome moves steadily
The spot market for European high-carbon ferro-chrome was stable last week, extending a steady trend since October 20, with the bulk of assessments held within a ten cent range.

Metal Bulletin’s price assessment for high carbon ferro-chrome on a delivered Europe basis was at $1.25-1.35 per lb on November 10.

One deal for 75 tonnes of high-carbon ferro-chrome was reported at $1.36 per lb, although that was for delivery around late December. One consumer in the UK was considering an offer of a few truckloads of the alloy for around $1.18 per lb for prompt delivery, he said.

Still, the bulk of assessments are in the current trading range and dealers reckon the market will be at least supported, if not move higher, by the end of the fourth quarter.

European steelmakers have passed on the cost of the higher fourth-quarter benchmark price to their customers in the alloy surcharges in November and December. That is expected to encourage ferro-chrome suppliers to hold their offer prices against steady consumption in the coming weeks.

Another consumer in Germany bought six tonnes of low-phosphorous ferro-chrome at $1.36 per lb for prompt shipment, he said. Most offer prices for low-phosphorous ferro-chrome have been reported to Metal Bulletin at $1.35-1.40 per lb and unchanged in the past few weeks.

Metal Bulletin's European ferro-chrome benchmark indicator was off a cent in the past week, currently standing at $1.29 per lb and paring a cent increase from the week before. The benchmark was at a quarterly peak of $1.41 per lb in mid-October.

Turkish chrome ore offers are stable at $335-345 per tonne despite UG2 chrome ore prices falling in the past three weeks. Domestic miners will be shutting some production as usual this winter, and the prospect of lower supplies is supporting offer prices, Turkish sources said.

Ferro-chrome wrap table

Shivani Singh

shivani.singh@metalbulletinasia.com

Ellie Wang

ellie.wang@metalbulletinasia.com

Echo Ma

echo.ma@metalbulletinasia.com

Chris Kavanagh

christopher.kavanagh@amm.com

Declan Conway

declan.conway@metalbulletin.com

Published

Shivani Singh

Ellie Wang

Echo Ma

Chris Kavanagh

Declan Conway

November 13, 2017

14:10 GMT

Galway