Chinese ferro chrome prices fall on supply-demand imbalance

The average trading atmosphere and light transaction performance suggested a lack of significant demand in the market. The decrease in prices across different grades of ferro chrome indicated a broad-based decline. Prices dipped off at around RMB 150/t ($21/t). Here's a breakdown:

• High-carbon ferrochrome: Prices remained within a range of RMB 8,650-8,850/t ($1,196-1,224/t), down by RMB 100/t ($14/t).
  
  
• Medium-carbon ferrochrome: Prices hovered at RMB 14,000-14,100/t ($1,963-1,976/t), diminished by RMB 200/t ($28/t). All prices are ex-works and include taxes.
  
  

The ferro chrome market declined due to several factors:

Steady chrome ore market: The chrome ore market experienced consistency this week. The external futures quotation of South African chrome ore being raised again suggests some upward momentum in prices.

However, despite the positive indicators, there are several factors limiting the upward movement of prices. The ferro chrome plants' limited acceptance of high-priced raw materials indicated a reluctance to invest in expensive inputs.

Supply demand disparity: The imbalance between supply and demand further exacerbates the situation, as it provides little support for maintaining higher prices. When supply exceeds demand, sellers may be forced to lower their prices to attract buyers and clear their inventory.

Adverse stainless steel market: One significant factor that contributed to this decline was the unfavourable condition of the stainless steel market.

The steel mills were not showing interest in purchasing high-priced ferro chrome and their overall purchasing willingness remained low, which indicated a lack of demand from one of the primary consumers of ferro chrome. This lack of demand can put downward pressure on prices further.

Outlook

Ferro chrome manufacturers are facing a challenging situation characterised by high-cost pressures and sluggish demand. Given these factors, it is anticipated that the ferro chrome market may remain stable in the short term.

However, it's crucial to closely monitor developments in steel production and demand to adapt the strategies accordingly.

Note: This article has been written in accordance with an agreement between CBC and BigMint.