China: Lack of Support from Favourable Factors, Ferro Chrome keeps on Weakening

This week, the domestic high carbon Ferro Chrome market has continued its weak trend while downstream stainless steel 300 series keep declining, prompting stainless steel mills to cut production with a dampened willingness for raw material purchase. In the short term, on the dearth of favourable news, the latter market has succumbed to weak consolidation.

Up to now, the mainstream price of general silicon HC Ferro Chrome offered by major producers in Inner Mongolia is at RMB 5,700-5,900 (USD 816-844) / 50 basis per MT, ex-mill, cash tax inclusive. The same in China's southern Sichuan province is at RMB 5,800-6,000 (USD 830-859), and agents offer RMB 6,100-6,300 (USD 873-901) /50 basis per MT, delivered, tax inclusive, in Zhejiang, Jiangsu and Shanghai.

A retrospective look at the price development in February will reveal that after a rapid increase of RMB 300 (USD 43)/50 basis per MT, bearish sentiments surfaced and dropped a cumulative RMB200 (USD29) /50 basis per MT over the last two weeks, following the flat tender price by mainstream mills, leaving little support to chrome market.

Since this week, expressway restored normal traffic in many areas, greatly relieved the logistic problem that the whole industry chain has been facing previously. However, the downstream production cut is still the biggest obstacle to market recovery. Moreover, the moderate and slight decline in the price of Chrome ore also leaves the current price of Ferro Chrome lacking support. Although near the month end of February, the new round of tenders by mills is yet to be released. After all, under the backdrop of increasing normalized operations, there is no worry about short supply. Traders are basically working back with a conservative outlook towards market development with price seemingly approaching the level before the holiday; in the short term, the overall market for chrome series is likely to forge forward in weak consolidation.