China: South African Chrome Concentrate Falls for Third Consecutive Week

The offers by South African suppliers of chrome ore is down by USD10/dmtu CIF China main port, which saw the spot cargo at Chinese port reacting in synch. However, no matter of the decline in the ore prices, the deadlock between overseas offers and buyer's expectant level remains. Yesterday, a major supplier offered USD113/dmtu for bulk shipment of concentrates 40-42% CIF, notching the historical low point over the past three years, with order quantity only 5,000MT though. This is enough to show that Chinese buyers are still not widely set to accept this price. While the future deliverables continued to decline in price, the depreciation of South African Rand and Chinese New Year have brought different aspects to seller and buyer sides. On the one hand, it adds the purchasing costs for buyers while on the other hand offset seller's loss.

Ferro Chrome plants received a reduced number of queries amid bearish elements in luke-warm market, where transactional price are on a downward track, prompting them to be pessimistic about the future market. Though the auxiliary materials and logistic costs have come down compared with previous days, plants in the South are facing loss and those operational ones are focused on own stock consumption; in the North, some plants purchasing spot chrome ore and are making some minimal profits, but are mainly focused on small batches of purchase due to the increased difficulty in alloy sales and prolonged payment settlement by stainless steel mills, which leads to liquidity drain. For chrome ore, the insufficient buying interest gives little support to the port spot cargo, leaving most of the traders suffering a loss. However, the downward trend still carries on.

Though the newly released policy provided incentive by increasing export tax rebate rate to 13% from 10% on some stainless-steel products, the market is still affected by a downward trend with some mills planning to suspend or cut operation. With the increasing number of alloy plants returning to the market, the output of alloy is supposed to resume 400,000MT, which, combined with imported alloy showing no apparent reduction in quantity does not help resolve the oversupply of alloys and its price will remain suppressed.

Up until last Friday, the Chinese port stock of chrome ore stood at 3.95 MnT, which according to the output of alloys, could last for 3 months for alloy plants; affected by the epidemics post-spring festival, the supposed ore purchase has been postponed and neither large scale alloy plants nor ore traders are set for ordering future deliverable ores due to the dampened chrome market. In contrast, the output of chrome ore by South Africa suppliers have not shown reduction, putting them to test of sales pressure. It is learnt that some South Africa suppliers have shipped cargo without confirmed buyers in a bid to alleviate rising stock.

Recently, South African announced its national disaster site and introduced the most severe measure ever to contain the virus spreading. However, it is known that this move has not affected the mining and shipping operation, bringing little change to the supply and demand pattern.

Over the past days, major stainless steels have rolled out the Mar tender price for HC Ferro Chrome. Tisco's tender price for fecr55c1000 stands at RMB 5,450, with a payment term of cash, tax inclusive, delivered. This is RMB150 down with reduced purchasing amount compared with Feb level; Baosteel's tender on the same is at RMB 5,650, also down RMB150, cash, tax inclusive, delivered, with reduced purchasing amount; Tsingshan's March tender price for fecr55c1000 is at RMB 5,647, cash, tax inclusive, delivered, also down RMB150 from Feb with close-to-regular purchasing amount.