- Weaker chrome ore cost support prompts price drops
- Falling stainless steel prices erode mill profitability
Mysteel Global: China’s ferro chrome prices have reversed their gains recently, entering a correction phase even as demand for the ferro alloy from the stainless steel sector remains strong, Mysteel Global noted.
On 15 October, Mysteel assessed prices of 55% high-carbon ferro chrome in Inner Mongolia, the key reference price in the domestic ferro chrome market, at RMB 8,500/t ($1,193/t), 50Cr, ex-works including VAT, lower by RMB 100/t ($14/t) from levels before China’s week-long National Day holiday that commenced on 1 October.
A combination of weaker cost support and muted downstream procurement is now exerting downward pressure on ferro chrome prices, an analyst in Shanghai commented.
Persistently high imports of chrome ore had eased the supply tightness in China’s domestic market seen previously, weighing on spot prices of chrome ore, she said.
Chinese chrome ore imports climbed to a high of some 2.1 million tonnes (mnt) in August, representing a 6.3% m-o-m rise and a y-o-y jump of 34.4%, data from the country’s General Administration of Customs (GACC) show.
This improved availability, the Shanghai source explained, prompted smelters to argue for lower raw material prices, which in turn weakened cost support for ferro chrome.
She added that falling stainless steel prices are significantly eroding mill profitability, leading the steelmakers to push back against high ferro chrome offers and opt for more cautious purchasing.
Also, on 15 October, Mysteel assessed spot prices of 304/2B Hongwang 2*1240 mm stainless cold-rolled coils (CRCs) in East China’s Wuxi at RMB 12,900/t ($1,811/t) in-warehouse, including the 13% VAT, down by RMB 150/t ($21/t) from the pre-holiday level.
Consequently, Chinese producers of 304-grade stainless CRC that use outsourced high-grade nickel pig iron had incurred an average loss of around 2% on every tonne of CRC sold as of 15 October, expanding from the average of 1.5% recorded on 30 September, according to Mysteel’s assessment.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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