Upbeat sentiment continues to boost China's ferro chrome market in June

China's high-carbon ferro chrome (FeCr) market has maintained its upward momentum from May into June, with smelters' output last month hitting a new high, according to Mysteel's data.

Buoyant market sentiment and robust demand from domestic stainless steelmakers are likely to further stimulate production enthusiasm among ferro chrome smelters and fuel the ferro alloys prices as well, noted an analyst from Wuxi, a major stainless trading hub in East China's Jiangsu province.

Mysteel's assessment shows that the price of high-carbon ferro chrome with 55% Cr content in North China's Inner Mongolia, a key reference price for the domestic ferro chrome market, climbed to hit a nine-month high of yuan 9,000/t EXW including tax as of 12 June, up by yuan 200/tonne ($27.6/t) from 13 May.

Chinese ferro chrome smelters have been more actively quoting higher prices for their products amid upbeat market sentiment, particularly after the country's major stainless steel mills announced higher tender prices for ferro chrome for June delivery, Mysteel Global observed.

For instance, CITIC Pacific Special Steel, a leading stainless steelmaker based in Jiangsu province, announced on 30 May its bidding price for high-carbon ferro chrome at yuan 9,300-9,500/t including delivery and tax for June delivery, marking a notable increase of yuan 120-320/t from its May bid.

Domestic stainless steelmakers, buoyed by higher stainless prices and increased profit margins last month, are more prepared to accept higher-priced ferroalloy products this month when ramping up stainless production, a market watcher noted.

Mysteel's latest monthly survey among the 43 stainless producers it tracks nationwide showed that their crude stainless steel production in May reached a nine-month high of 3.3 million tonnes (mnt), up by 78,700 t or 2.4% from the previous month.

China's ferro chrome output also surged in May, with high-carbon ferro chrome production rising by 8.4% on month to 811,900 physical tonnes (pt), the highest since January 2021, according to Mysteel's survey sampling 95% of all domestic ferro chrome smelters.

Among China's major ferro chrome production bases, Sichuan province in Southwest China posted the sharpest on-month increase of 92.4% in ferro chrome output to 35,200 pt in May, Mysteel's data shows.

A primary driver of local smelters' production ramp-up was the lower cost of electricity in Sichuan, where more inexpensive hydropower has been generated for smelting with the arrival of the wet season. The price of electricity for ferroalloy smelting in Sichuan dropped to yuan 0.41/kWh as of 12 June, a decrease of yuan 0.07/kWh compared to one month earlier.

China's ferro chrome output is likely to move higher this month as demand from downstream stainless steelmakers is expected to remain robust. Mysteel's survey on the production schedules of domestic stainless steelmakers reveals that crude stainless steel production in June is expected to reach 3.37 mnt, an increase of 2% compared with May.

This bolstered sentiment among traders of chrome concentrates as well, prompting them to defend their offering prices, the analyst highlighted. According to Mysteel's tracking, the price of South Africa-origin 42% grade chrome concentrates at Tianjin port in North China reached yuan 64/dmtu on 12 June, up by yuan 3/dmtu from the previous month.

However, the room for further rises in chrome concentrate prices may be limited this month, as ferro chrome smelters are reluctant to accept high-priced chrome concentrates given their thin profit margins, the analyst added.

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