NEW YORK — Ferrochrome prices were higher or stable across U.S., European and Chinese markets, while particular strength was noted in South Korea and Japan.
Markets were buoyed by a tightening in supply as well as a less dramatic decline in the European benchmark than some had expected. The European charge and high-carbon ferrochrome benchmark price dropped 11 cents to $1.54 per pound for the second quarter of 2017.
The settlement was announced to the Johannesburg Stock Exchange on March 15 by leading South African ferrochrome producer Merafe Resources Ltd., which operates a joint-venture ferrochrome project with Glencore Plc.
At the start of March, most market participants polled by AMM sister publication Metal Bulletin said they expected a 10- to 15-cent reduction in the benchmark price, reflecting the decline in global spot tags since the first quarter price soared 55 cents to $1.65 per pound.
The 6.7-percent reduction in the benchmark—compared with early predictions of as much as 12 percent—reflects a notable tightening of ferrochrome supply towards the end of the first quarter.
Metal Bulletin’s ferrochrome benchmark indicator predicted a second-quarter price of $1.48 per pound on March 10, up from $1.47 on March 3, when the prediction dropped from an initial $1.50 per pound, based on the latest available data.
Chinese prices flat
Meanwhile, Chinese domestic ferrochrome tags held firm ahead of new tender prices. Producers were mostly unwilling to sell last week, as they anticipated higher tender prices.
Contract prices for Chinese domestic high-carbon ferrochrome, delivered duty paid, remained stable week on week at 9,300 to 9,595 yuan ($1,348 to $1,391) per tonne on March 17.
Market participants were expecting major Chinese stainless steel mills to request cargoes this week. Tender prices are very likely to be released next week, sources said.
Spot prices for Chinese domestic high-carbon ferrochrome, delivered duty paid, also were unchanged week on week at 9,700 to 10,300 yuan per tonne.
There were limited Chinese ferrochrome imports last week, with cargoes offered sporadically. Chinese sources said Indian cargoes had been sold at $1.10 per pound.
Some Zimbabwean cargoes were heard offered at $1.10 per pound, but no South African cargoes prices were heard in China.
Metal Bulletin’s charge chrome index, c.i.f. Shanghai, which tracks South African imports to China, held at $1.14 per pound, also on Friday.
Strength in Asia
Ferrochrome prices in both Japan and South Korea increased last week as Indian suppliers further raised offers on climbing prices in China. Metal Bulletin assessed c.i.f. Japan 60-percent chrome ferrochrome at $1.16 to $1.20 per pound on Friday, up from $1.15 to $1.19 a week earlier. South Korean numbers inched up to $1.11 to $1.15 from $1.09 to $1.12 a week earlier.
Indian sellers also confirmed that they concluded deals to China at $1.10 per pound c.i.f. China, and have subsequently raised their offers to $1.15 per pound. This week, they also sold cargoes to Europe at $1.10 per pound f.o.b. India.
“Offers are all going up this week. There’s no offer cheaper than $1.10 (per pound c.i.f. South Korea) now. The normal offer level is $1.13 to $1.15 (per pound c.i.f. South Korea),” a major trader said in Seoul.
A second trader echoed these sentiments, but had managed to purchase a small volume of cargo at $1.11 per pound c.i.f. South Korea on March 16.
There were no major tenders in South Korea last week, although there was talk that Posco Ltd. may soon start its next-quarter purchases.
Similarly, activity in Japan was limited, as most buyers in the region thought the current offers were too high to accept.
Offers reported by traders were in a range of $1.17 to $1.21 per pound c.i.f. Japan this week. One deal of about 500 tonnes was concluded at about $1.16 to $1.17 per pound c.i.f. Japan.
“The price is going up, but the increase is very small and the market is not active. Only very small deals can be heard in the market now,” one major trader said in Tokyo.
U.S. numbers still firm
The U.S. high-carbon ferrochrome market also maintained strength last week, despite a similar lack of significant spot market activity.
Spot prices for U.S. high-carbon ferrochrome edged up to $1.40 to $1.49 per pound on March 16, up marginally on the high end from $1.40 to $1.48 per pound previously.
Although spot market activity has been lackluster, prices have been able to remain firm.
“The market is still rather quiet on the spot, but the fact is they don’t need material, because they are well covered on contracts,” a supplier source told AMM. “Contract business continues to stay relatively strong.”
Improved production activity at steel mills has led to increased consumption, effectively tightening the market to support prices.
“Demand and production coming out of the mills continue to stay quite steady, and if anything, it is bumping up a bit,” a second supplier source told AMM. “Shipments and releases are tending to be slightly higher than February shipments. They are looking anywhere between 5-percent and 10-percent higher right now.”
While mills continued to consume material at increasingly healthy rates, a consolidated supply has similarly provided support for pricing.
“There is not much material available sitting in the USA, and I don’t think traders will bring material in right now,” a third supplier source explained. “With numbers firming up overseas, and spot market activity limited, there is very little incentive for traders to bring in material.”
“Pricing should hold very firm, unless we see more cheap or lower-grade imports flood the market,” a fourth supplier said. “But I think because of limited spot demand no one will bring a significant tonnage.”
The supply consolidation has allowed a price floor to emerge in recent weeks, as market participants have refrained from dipping below the $1.40-per-pound mark on spot transactions.
“The market has a clear floor right now. No one is selling below $1.40 (per pound),” the first supplier said.
“I don’t see anyone offering below $1.40 (per pound),” the fourth supplier source agreed.
Despite the recent settlement of the higher-than-expected European ferrochrome benchmark price for the second quarter, market participants did not expect much of an effect on pricing in the U.S. market.
“It is too soon to tell what kind of an impact the new benchmark will have, but not much I assume,” the fourth supplier source told AMM.
“I think that the benchmark is already priced in to the current market levels. It shouldn’t be much of a market mover,” the third supplier source said.
European numbers stable
European high-carbon figures were steady last week, after climbing a week earlier. High-carbon ferrochrome held in the wide range of $1.27 to $1.42 per pound, and material changed hands in an even wider range.
European tender sales are understood to have taken place at the low end of the range, while a buyer confirmed purchasing just below this level.
“We have seen an auction result of $1.285 per pound (chrome) for 75 tonnes of 65-percent chrome … in Germany,” one market source in Europe said.
However, large volumes of good grade material also changed hands at the upper end of the range and higher. While trade was light, sellers were considering raising prices in the week ahead.
“It’s a dry trade. I’m going to increase bottom prices in the coming week, basis this week’s performance,” one seller said on Friday.
High-carbon price strength has lagged in comparison to low-carbon prices, according to a trader, who noted that demand for low-carbon was still soaring last week.
Low-carbon ferrochrome prices in Europe have gathered strength in recent weeks as availability has tightened due to increased demand in China, where production costs have been high, sources said.
High chrome ore inventory in South Africa continued to weigh on upper group two (UG2) chrome ore prices last week.
Metal Bulletin’s recently launched chrome ore index, which replaced its UG2 assessment on March 10, was calculated at $370 per tonne c.i.f., down from $372 a week earlier.
Most chrome ore offers were heard at $370 per tonne, but Chinese sources said deals may have been concluded below $370 per tonne as miners were eager to sell amid high inventory at South African ports.
“Chinese ferrochrome producers are waiting for a new round of ferrochrome tender prices from Chinese stainless steel mills. They did not purchase chrome ore actively this week. We will wait until after the Asian Ferroalloys conference or wait for new tender prices to be released, then decide,” a main Chinese ferrochrome producer said.
The Metal Bulletin Asian FerroAlloy Conference is taking place this week in Hong Kong.
Turkish chrome ore prices, by contrast, were slightly higher last week, as sellers in Turkey held their offers firm. Forty- to 42-percent Turkish lumpy reached $380 to $410 per tonne c.f.r. main Chinese ports, up from $375 to $405 a week earlier.
“Forty-two- to 44-percent concentrate was sold at $400 (per tonne) this week; $375 is too low for Turkish lumpy, it’s closer to around $400 to $410. I am asking $420 for the same,” one seller said.
Rena Gu, Singapore; Fleur Ritzema, London; and Ellie Wang, Shanghai, contributed to this report.