- Stable prices contribute to production enthusiasm
- Stainless steel mills lift run rates, boosting demand
Mysteel Global: China’s output of high-carbon ferro chrome increased by around 3.4% m-o-m to 801,400 tonnes (t) in July, reaching the highest level since August 2024, according to Mysteel’s latest survey covering 95% of domestic capacity.
Within the total, output in Inner Mongolia, China’s primary production hub, stood at 592,600 t last month, registering an m-o-m rise of 1.9%, the survey results showed.
“Domestic high-carbon ferro chrome output breached the 800,000 t mark in July, which was in line with our expectations, due mainly to a robust production enthusiasm among the smelters,” said an industry insider.
Demand for high-carbon ferro chrome was relatively strong last month, as domestic stainless steel mills had lifted their run rates, incentivising smelters to produce more of the ferro alloy, he explained.
China’s crude stainless output in July reached around 3.21 million tonnes (mnt), remaining at a high level, according to the results of Mysteel’s most recent survey of the 43 stainless producers it regularly tracks nationwide.
Meanwhile, the steady climb in China’s high-carbon ferro chrome output during February-June has yet to reverse the persistent supply shortage, which has also prompted ferro alloy smelters to produce aggressively, Mysteel Global noted.
Healthy demand, coupled with China’s persistently low imports of the product, kept supply and demand tightly balanced.
In June, China’s imports of high-carbon ferro chrome amounted to 198,800 t, still at a low level despite a m-o-m jump of 28%, according to data from China’s General Administration of Customs (GACC). In parallel, the average monthly import volume in the first half of this year stood at 240,000 t, the GACC numbers show, representing a y-o-y decline of 25%.
The high productivity of smelters also reflected improved market confidence, as bid prices by major stainless mills for July bettered market expectations.
For example, China’s Tsingshan Group — the country’s largest stainless steel producer — maintained its bid price of high-carbon ferro chrome for July delivery at RMB 8,095/tonne (t) (50% Cr basis), or $1,129/t, keeping its prices unchanged for a second consecutive month.
The decision had been a far cry from the expectations of market participants, who were actually expecting a price cut by the mill at that time. The absence of any price reduction had ensured that the ferro alloy producers could continue to enjoy reasonable profit margins and prompted them to maintain normal output levels or ramp up production, Mysteel Global understood.
Also contributing to the elevated production activity were some smelters in North China that had resumed production after completing maintenance. “Moreover, some smelters in South China were also motivated to maintain high output as local electricity costs fell, thanks to the high levels in hydroelectric dams — typically the case during June-August — which helped their total production costs to fall to their lowest levels this year,” said an industry insider based in East China’s Wuxi city.
This month, domestic high-carbon ferro chrome production should remain high, a source suggested, pointing to the tight supply-demand balance and firm high-carbon ferro chrome prices. “Besides, lower production costs at some producers and restarts at some smelters in North China that were previously stopped for maintenance will also drive output growth,” he added.
Notably, high-carbon ferro chrome prices will face downside pressure should output continue to stay at such high levels in the long term, the industry insider commented.
On 12 August, Mysteel’s assessment showed that prices of 55% high-carbon ferro chrome in Inner Mongolia, the key reference in China’s ferro chrome market, stood at RMB 7,900/t ($1,101/t), 50Cr, ex-works, including VAT, higher by RMB 100/t ($14/t) from a month earlier.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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