China's Ferro Chrome Prices Stabilize on Increased Input Costs

Chinese prices of high-carbon Ferro Chrome had stabilized at a 3.5-year low as of December 31, mainly because smelters were unwilling to cut their prices further considering the cost burdens they were carrying, market sources said on Thursday.

On the last day of last year, the price of high-carbon FeCr55C8 in North China's Inner Mongolia, the key reference price in China's Ferro Chrome market, reached Yuan 5,900/MT (USD 846.2/t) including 13% VAT, unchanged on week but down by Yuan 200/MT or 3.3% on month, Mysteel's database showed.

Increased prices of coke, an important raw material for Ferro Chrome production, led the smelters to firm their Ferro Chrome prices, a Shanghai-based market watcher said, adding the current price of Ferro Chrome is about equal to the smelters' total costs.

Over the week to December 31, Mysteel's composite price for domestic coke had risen by Yuan 24.5/MT or 1.3% higher on week to reach Yuan 1,863.2/MT including the 13% VAT, a near four-month high.

Meanwhile, prices for the ferroalloy's chief raw material, chrome ore, were also steady. The smelters need to stock up earlier for production over the Chinese New Year (CNY) holiday because nearly all truck deliveries will cease a few days before the holidays, the watcher said.

"The distance from Tianjin port to Inner Mongolia (where many smelters are located) is six to seven hours by truck and during Chinese New Year when the roads are crowded with people returning to their hometowns for the holidays, traffic snarls and disruptions are inevitable," she explained, noting that freight charges will be also increased afterward. The first is a major chrome ore stocking port and the latter a key Ferro Chrome production area and both are located in North China, Mysteel Global understands.

An official with a Tianjin-based trading house importing chrome ore confirmed the impact that Chinese New Year will have on logistics, pointing out that truck transportation will virtually end from January 19.

The price for South Africa-origin 42% grade chrome ore concentrates at Tianjin port reached Yuan 25.75/dmtu, unchanged on the week but down by Yuan 0.5/dmtu or 1.9% on the month, according to Mysteel's database.

As for the price for Ferro Chrome and chrome ore in the near term, the trader said both are likely to remain steady until steel mills submit their bids for February supplies.

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.