The ferro-chrome benchmark is negotiated quarterly by a leading South African ferro-chrome producer and a major stainless steel mill. The second-quarter price settled at $1.42 per lb
and the third-quarter settlement is due towards the end of June.
Metal Bulletin’s ferro-chrome benchmark indicator
rose to $1.40 per lb on Friday June 15, up from $1.35 per lb on June 8, and compared with a second-quarter low of $1.27 per lb in early May.
Also on June 15, Metal Bulletin’s charge chrome index, cif Shanghai
rose 4 cents week on week to 97 cents per lb and European high carbon ferro-chrome prices
rose to $1.32-1.45 per lb, from $1.29-1.41 per lb a week earlier.
A wide spread of predictions for the third-quarter benchmark persists, but the lowest estimates - predicting a drop of as much as 22 cents per lb - have mostly given way to expectations of a smaller reduction.
“I previously thought the benchmark would be $1.20 per lb, but now with the tightness in China it could be $1.25-1.26 per lb,” one supplier source told Metal Bulletin.
Others said they have also altered their view but never expected a price as low as $1.20 per lb.
“I previously expected $1.25, not $1.20. It is obvious there has been some pickup in China and it’s been stronger than I expected. That Chinese pickup brings us in the direction of what Metal Bulletin’s benchmark indicator is suggesting,” a ferro-chrome consumer source told Metal Bulletin last week, when the indicator stood at $1.35 per lb.
While the price reflects material to be consumed by European stainless steel mills, China increasingly sets the tone for other global regions. Today’s Chinese ferro-chrome market is tight due to shutdowns implemented for environmental reasons
and this has allowed overseas producers to successfully hike the prices of exports to China.
“Ten days ago, we were expecting a big drop of 10-15 cents in the European benchmark but Chinese prices are picking up and that is a reference for benchmark negotiations in Europe. So maybe the drop won’t be that significant now,” a second supplier source said.
Some market participants have even predicted a rollover of the second-quarter price, market sources told Metal Bulletin.
“My view is that the benchmark decrease will be minimal, in fact maybe nothing at all if things continue the way they are in the coming weeks,” a third supplier told Metal Bulletin.
European ferro-chrome prices have been largely stable throughout the second quarter and the higher end of their trading range has been roughly in line with the benchmark.
The recent spot price increase in Europe, in addition to rising import prices in China, makes it difficult to argue for a large reduction in the benchmark price, particularly after ferro-chrome production costs just rose in South Africa after the country’s more expensive winter power tariff kicked in in early June.