China: Chrome ore prices to remain under pressure in Q3 CY’26 as port stocks hit historic high

• Chinese port chrome ore inventories hit a record 4.74 mnt
• South African chrome ore exports surge 38.8% y-o-y in H1’26

SteelDaily: Following first-half gains, China’s chrome ore market is expected to correct in Q3 CY’26 before recovering in Q4 CY’26. Prices are likely to remain under pressure in July-August due to high port inventories and seasonal weakness in stainless steel demand. However, inventory draw downs are expected from September, supported by a recovery in stainless steel production and renewed ferro chrome restocking demand.

Supply constraints lift Q1 performance

In the first half of CY’26, domestic chrome ore market transitioned from a strong Q1 to a pronounced correction in Q2. Despite H1 CY’26 average prices remaining above H2 CY’25 levels, market fundamentals shifted from overseas supply tightness to elevated Chinese port inventories amid seasonally weak stainless steel demand.

In Q1, chrome ore prices rose on South African supply constraints, higher freight rates and recovering stainless steel output. Falling port inventories and stronger ferro chrome restocking supported active spot trading, pushing South African 40-42% chrome concentrate above RMB 60/t ($9/t).

By end-June, chrome ore inventories at major Chinese ports climbed to a record 4.74 mnt, with South African material accounting for 82% of the total and Tianjin Port holding 88% of nationwide stocks. The build-up was driven by a 38.8% y-o-y surge in South African chrome ore exports to 14.14 mnt in H1’26, as high power and production costs curtailed domestic ferro chrome smelting and increased raw ore shipments.

Sluggish demand persists despite increased ferro chrome supply

On the demand side, lower power costs boosted ferro chrome production, but raw material demand weakened as the stainless steel sector entered its seasonal maintenance period. Ferro chrome producers shifted to need-based procurement, while traders offered discounts to accelerate inventory liquidation and improve cash flow.

High carbon ferro chrome prices followed an inverted V-shaped trend in H1’26, rising from RMB 8,100/t ($1192/t) at the start of the year to RMB 8,700/t ($1281/t) by end-March before declining on weaker demand and higher supply. Despite the correction, the H1 average price edged up 8.9% y-o-y to RMB 8,464/t ($1246/t).

High-carbon ferro chrome production reached an estimated 5.34 mnt in H1’26, up 32% y-o-y, driven by the restart of southern smelters during the rainy season and new capacity additions, with monthly output briefly exceeding 900,000 t.

Chrome ore oversupply persists despite higher steel production

China’s stainless steel crude production rose 6% y-o-y to 21.2 million t in H1’26, with 200-, 300- and 400-series output increasing 7-9%. However, stronger chrome ore arrivals outpaced production growth, keeping port inventories elevated, while the seasonal slowdown in June-July limited near-term demand for ferrochrome and chrome ore.

Outlook

Chrome ore market eyes Sep inventory correction

China’s chrome ore market to remain under pressure in Q3 before recovering in Q4. Elevated port inventories, the seasonal slowdown in stainless steel, and ample ferro chrome supply are likely to weigh on prices through August. A turnaround is expected from mid-September as stainless steel production enters the peak season and ferro chrome producers resume raw material restocking, triggering gradual inventory draw downs. While chrome ore arrivals are expected to continue outpacing consumption in July-August, keeping inventories near record highs, firm South African mining costs and elevated freight rates are expected to limit further price declines.

Tighter high-grade supply to support Q4 prices

In China, chrome ore prices are likely to recover in Q4 on higher power costs and lower ferro chrome output amid tighter high-grade ore supply. However, year-end destocking and possible steel production cuts are expected to trigger a gradual correction after December as demand softens and inventories become available.

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