China: Ferro chrome prices remain stable amid supply surplus, cost challenges

The ferro chrome market experienced a period of relative stability amidst mixed signals and cautious optimism. The prices of the various grades were:

High-carbon ferro chrome: Prices were at RMB 8,950-9,150/t ($1,232-1,259/t).

Medium-carbon ferro chrome: Prices hovered at RMB 14,000-14,300/t ($1,927-1,968/t), All prices are ex-works and include taxes.

Factors driving market:

Price stability amidst supply-demand dynamics: Prices of ferro chrome remained flat in June compared to May, aligning with expectations of industry players. This price stability, however, has tempered the potential for positive market development due to a supply surplus.

While ferro chrome plants exhibited a strong inclination to support prices, the reality of excess supply has exerted downward pressure on prices.

Cost challenges, production dynamics: Chrome ore prices continued to pose significant challenges to ferro chrome producers, elevating production costs. Despite their reluctance to decrease prices further, the weak demand and surplus supply scenario limited their ability to maintain higher price points. As a result, the market witnessed a cautious approach from both buyers and sellers, emphasising cost-efficiency in transactions.

Stainless steel market dynamics: The downstream stainless steel sector reflected a steady operational phase with a general trading atmosphere. However, subdued demand and increased risk aversion among merchants have led to a cautious approach to purchasing. The decline in nickel and stainless steel prices further underscored the prevailing bearish sentiment, prompting downstream players to adopt a wait-and-see stance.

Outlook

In conclusion, the southern ferrochrome factories will gradually resume production, and new projects in the north may start, leading to a significant increase in future supply. However, downstream steel mills have a general stocking sentiment, resulting in transactions based mainly on rigid demand, with weak demand-side support. Due to high production costs, ferrochrome manufacturers are not inclined to further reduce prices, so the market is expected to remain stable in the short term.

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