- Cheap hydropower, elevated stainless steel output sustains production momentum
- Tsingshan, TISCO cut procurement prices by $30/t in Aug’26 amid supply surplus
China’s production of high-carbon ferro chrome (FeCr) rose for a third consecutive month in July to reach 997,500 tonnes (t), up 4.8% m-o-m and hitting a record high, according to Mysteel’s latest survey of domestic ferro chrome smelters hosting over 95% of total domestic capacity.
Ferro chrome production in Inner Mongolia, the country’s primary production hub, totalled 751,700 t, rising by 2.1% from June and accounting for nearly 79% of the national total last month.
The production increase was linked to two key factors, Mysteel Global notes. First, the ongoing rainy season in southern China allowed smelters there to tap inexpensive hydroelectricity to gradually lift operating rates. Second, crude stainless steel output remained elevated last month, sustaining healthy domestic demand for ferro chrome and supporting the smelters’ high run rates.
Crude stainless output from the 43 Chinese mills under Mysteel’s regular tracking is scheduled to reach 3.69 million tonnes (mnt) this month, representing a m-o-m increase of 3.1% from their actual production in July, as reported.
However, the resulting increase in ferro chrome demand from stainless mills is unlikely to keep pace with the rapid expansion of supply of the ferro alloy, Mysteel Global suggests. With ferro chrome output already at elevated levels, the market is poised to remain in surplus.
On the price front, the weakening trend that emerged last month has extended into August, with prices coming under fresh pressure.
Reflecting the already-existing supply-demand imbalance, major Chinese stainless mills have reduced their August procurement prices for HC ferro chrome under long-term contracts by RMB 200/t ($30/t), as Mysteel Global reported.
Tsingshan Group, the country’s largest stainless steel producer, set its long-term contract procurement price for August at RMB 8,095/t or $1,200/t (50% Cr basis) including tax and delivery, cash payment, sources confirm.
Taiyuan Iron and Steel Co (TISCO), another major stainless steelmaker based in North China, has followed suit. For this month’s deliveries, the company has nominated its August purchase price at RMB 7,895/t ($1,170/t) (50% Cr basis) on the same basis, marking an identical RMB 200/t ($30/t) on-month reduction.
Following these price cuts, other mills have also pushed for lower ferro chrome procurement prices, undermining market confidence. Trading activity has remained muted, with participants largely staying on the sidelines, while some mills and traders have resorted to selling at lower prices, according to market sources.
On the cost front, chrome ore prices have stayed firm recently. On 10 August, Mysteel assessed the portside price for 40-42% South African chrome concentrates at RMB 54.5/dmtu ($8/dmtu), flat from a week earlier.
Seaborne prices inched higher, however. On the same day, Mysteel assessed the CIF price for 40-42% chrome concentrates shipped from South Africa to Tianjin at $285/dmt, higher by $3.5/dmt on week.
Overall, ferro chrome smelters are caught in a squeeze between rising raw material costs and falling procurement prices.
With ferro chrome output already robust, the market faces a clear oversupply situation, and short-term price weakness is expected to persist, Mysteel Global notes.
On 10 August, Mysteel assessed the price of 55% high-carbon ferro chrome in Inner Mongolia lower at RMB 7,925/t ($1,175/t), 50Cr, ex-works including VAT, RMB 100/t ($15/t) below the previous week’s level.
Note: This article has been published in accordance with a content exchange agreement between Mysteel Global and BigMint.
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