Tsingshan Group, Baosteel, and TISCO all raised their Ferro Chrome purchase price for March by 100 Yuan/MT.
A supply shortage of Chrome ore from South Africa coupled with its higher prices due to Rand appreciation has encouraged the rise in Ferro Chrome prices in line with rising cost of production in China.
Chinese major steel mills have raised Ferro Chrome tender price by a lower than expected Yuan 100/MT on M-o-M basis. Market participants said the lower-than-expected tenders could lead to a widening bid-offer spread and further supply tightness in China.
Baosteel has set its purchase price for March at 8,000 Yuan (equivalent to 96 cents/lb), while Tsingshan Group and TISCO set their March tender prices at 7,996 Yuan and 7,750 Yuan respectively.
Indian Ferro Chrome producers claimed to have concluded deals at 99.5 cents/lb CIF China, which is still around 3.5 cents/lb higher than the tender price for March. However, market participants are confident that the spot prices will not drift downwards on rising UG2 Chrome Ore prices.
As winter is heading in, electricity cost in South Africa has increased, pushing the Chrome Ore prices further up. Moreover, appreciation of the Rand (which is at a 3-year high) has also helped lift Chrome Ore prices.
Presently, 40-42% grade Chrome Ore prices from South Africa is around USD 240/MT CIF China.
In the Chinese domestic market, Ferro Chrome supply had been low since its government bodies barred production of various ferro alloys due to environmental concerns. Hence, they have been more dependent on imported alloys, creating a bullish sentiment in the market.
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