- Steady mill demand sustains FeCr output
- Imports fall, encouraging production growth
Mysteel Global: China’s production of high-carbon ferro chrome rose for the fourth consecutive month in June to reach 775,200 tonnes (t), higher by 6.5% from May, according to Mysteel’s latest monthly survey among the 177 domestic ferro chrome smelters it samples, covering about 95% of the country’s total smelting capacity.
Among the total, production in Inner Mongolia rose 5% m-o-m to 581,600 t last month, the survey findings showed.
The continuous rise in China’s ferro chrome output was mainly attributed to the steady demand from stainless steel manufacturers, maintaining relatively high levels of production. Meanwhile, ferro chrome imports declined, encouraging domestic smelters to ramp up production to meet the supply shortfall.
For June, total production of crude stainless steel among the 43 stainless producers under Mysteel’s survey came in at 3.29 million tonnes (mnt), still a high level, though it had slipped by 171,300 t or 5% m-o-m.
In parallel, many smelters in southern China resumed operations in June, as the wet season rains enabled them to use low-priced hydropower for smelting, which reduced their production costs, Mysteel Global learnt. The lower prices of chrome ore also helped.
As of 30 June, CIF prices of 40-42% grade chrome concentrate imported from South Africa to Tianjin Port reached $255/dry metric tonne (dmt), falling by $20/dmt from the end of May. Domestic portside prices of the same grade slipped by RMB 6/dry metric tonne unit (dmtu) ($0.8/dmtu) m-o-m to RMB 54.5/dmtu ($8/dmtu) according to Mysteel’s assessment.
Meanwhile, bids for ferro chrome, as tabled by major stainless producers for delivery in July, remained stable, improving market sentiment and giving Chinese smelters some confidence to sustain their production momentum.
Tsingshan Group – China’s largest stainless steel producer – announced on 24 June that it would roll over its bidding prices of high-carbon ferro chrome for July delivery at RMB 8,095/t ($1,126/t) (Cr:50% basis).
China’s ferro chrome prices had shown signs of stabilising in the second half of June after the decrease in the first half month. At the end of June, Mysteel assessed prices of Cr: 55% ferro chrome in Inner Mongolia at RMB 7,800/t ($1,087/t) (Cr:50% basis), unchanged since 16 June, though it was RMB 200/t ($28/t) lower compared with one month earlier.
For this month, ferro chrome output is expected to stay high. Domestic smelters remain enthusiastic about production, given the persistent shortage of supply and low electricity costs during the rainy season, according to a market watcher in Shanghai.
However, if ferro chrome production grows too rapidly, it may disrupt the supply-demand balance and put some pressure on prices of the ferro alloy, he warned. At the same time, lacklustre stainless demand and the weakness in prices of the same may persuade Chinese mills to cut their procurement values of raw materials such as ferro chrome, he added.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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