China: Ferro chrome prices remain stable as weak demand offsets upstream cost pressure

• Cost support and steel bids stabilise market
• Weak demand and high inventory limit upside

High-carbon ferro chrome (Cr:50%, C:6-8%) prices in China held stable w-o-w at RMB 8,490-8,900/t ($1,246-1,307/t). Medium-carbon (Cr:60%, C:1%) prices remained unchanged at RMB 13,300-13,500/t ($1,952-1,982/t), while low-carbon (Cr 60%, C 0.1%) prices also stayed stable at RMB 14,000-14,300/t ($2,055-2,099/t), ex-works including taxes.

In China, domestic ferro chrome prices remained stable post-holiday, with high-carbon quotations unchanged as the market entered a gradual recovery phase.

Market updates

Post-holiday sentiment remains mixed: In China, ferro chrome sentiment remained subdued during the holiday period due to weaker stainless steel output plans, ample raw material inventories, and soft bidding prices from special steel mills. However, a stronger-than-expected rise in May bids from leading mills lifted post-holiday sentiment. Despite stable April conditions and cost support from freight and ore, elevated port inventories and power tariff expectations kept the market in a stalemate.

Supply dynamics stays tight despite: Supply-side conditions remained relatively tight, with producers maintaining stable quotations and a price-supportive stance. While April output stayed high nationally, regional fluctuations persisted, with Inner Mongolia witnessing declines due to maintenance, offset by rebounds elsewhere. Operating rates hovered near 73%, while capacity utilization remained around 70%. Reduced furnace activity impacted output, though upcoming wet-season production in southern regions is expected to gradually restore supply momentum.

Weak downstream demand limits price upside: Demand conditions remained constrained as downstream steel producers resumed operations slowly, maintaining cautious procurement strategies. Stainless steel output softened slightly in April, particularly in the 300 series grades, although a recovery is anticipated in May. High inventory levels and pressured steel margins led mills to limit ferro chrome purchases to essential volumes. Consequently, subdued bidding activity and cautious buying sentiment continued to restrict any significant upward movement in ferro chrome prices.

Outlook

Ferro chrome prices are expected to remain range-bound, supported by costs and steel bids, while weak demand, high inventories, and slow recovery limit sustained upside momentum.

(With inputs from CBC)