Chrome ore buyers in China have been anticipating lower offer prices for chrome ore, arguing that the rand depreciation means South African producers are earning more in their own currency when they sell in dollars.
Metal Bulletin’s UG2 chrome ore index, cif China dropped $3 week on week to $158 per tonne on Friday August 17, the same day the South African rand weakened to 14.7 against the dollar, from 14.2 on the previous Monday.
This means UG2 prices have increased slightly in rand terms.
In recent weeks, the weakening of China’s currency has been making imports more expensive for Chinese buyers and, coupled with the volatility of the rand, sentiment in China’s raw materials markets has been risk averse.
Some market participants believe chrome ore offer prices should have been cut further last week, especially while high stocks in China cap demand for fresh cargoes.
“The rand has been off...