Chinese chrome consumers predict weaker ore market amid South African alloy production cuts

Cuts to South Africa’s production of ferro-chrome have added to bearish market sentiment in China amid predictions that increased availability of raw materials will weigh on ore prices, Fastmarkets heard in the week ended Friday June 14.

South African producers Mogale Alloys and Hernic have announced production cuts in recent weeks amid rising costs and low prices. Glencore reduced its production guidance in April and there have been rumors that further reductions may soon be announced by the market. Fastmarkets’ China import charge chrome index, cif Shanghai, hit a two-year low of $0.75 per lb on June 14. Chinese sources believed that the cuts will only release ore that will be sold into their raw materials market, instead of being consumed in South Africa. “If ferro-chrome producers reduce their output, what will they do with the ore? I guess the answer is sell it, probably to China,” a Chinese market participant said. “I thought the bottom line for the chrome ore price in China would be around $145 per tonne, but now I think it will be lower.” Still, suppliers of South African chrome ore and ferro-chrome point to rising production costs,...

Published

Janie Davies

Amy Lv

June 14, 2019

16:08 GMT

London, Shanghai