China: Ferro chrome market stable as soft demand counterbalances rising ore costs

Ferro chrome prices in China remained unchanged this week despite rising production costs and oversupply challenges. Prices of various grades:

High-carbon ferro chrome: Prices were at RMB 8,850-9,050/t ($1,221-1,249/t).

Medium-carbon ferro chrome: Prices hovered at RMB 13,800-13,900/t ($1,905-1,919/t). All prices are ex-works and include taxes.

Key market movers

Market stable amid cost surge: The ferro chrome market has stayed stable. June's large-scale steel tenders have kept prices flat compared to May, aligning with factory expectations and curbing market optimism. Rising chrome ore prices have inflated production costs for ferro chrome plants. While these plants aim to maintain prices, the oversupply situation is weakening ferro chrome prices despite their efforts.

Chrome ore market faces stalemate: The chrome ore market remained stable with average trading atmosphere. Bolstered by strong chrome ore futures, spot traders maintained high prices. However, the industrial chain remained in a stalemate: while miners offer strong prices, downstream buyers were reluctant to accept high prices.

Demand uncertainty plagues stainless steel market: The downstream stainless steel market functioned in a stable way. While stainless steel futures remained strong which boost market sentiment and prompted traders to push for higher prices, demand remained weak.

Increasing market risk aversion and cautiousness among downstream traders have resulted in a hesitancy to place orders. Most large-order customers have adopted a wait-and-see approach, reflecting a lack of confidence in the futures market.

Outlook

Ferro chrome units in south China are set to resume production, and new northern projects may come online, significantly increasing supply. However, downstream steel mills' stocking sentiments remain lukewarm, with transactions driven by rigid demand and weak support from the demand side. Due to high production costs, manufacturers are reluctant to reduce prices, leading to an expected stable ferro chrome market in the short term.

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