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China ferrochrome bids out of sync with S. Africa supply

Keywords: Tags  China stainless mills, South Africa ferrochrome, ferrochrome prices, Eskom, ferrochrome, chrome ore, Ekin Maden, Eti Krom Janie Davies

LONDON — Chinese stainless steel mills have slashed their March purchase prices for ferrochrome, as South African producers negotiate further power-related cutbacks and insist they have no spot material to offer.

Chinese mills won’t pay more than 90 cents per pound for ferrochrome, they said March 8. 

South African producers have been accustomed to prices of around 97 cents per pound and are in talks to sell more power back to state energy group Eskom Holdings SOC Ltd. They say they can’t cut their offers because they don’t have the spot material, and that they soon will not have the electricity.

However, a drop in the charge chrome index of AMM sister publication Metal Bulletin to 94 cents per pound c.i.f. Shanghai on March 8, down 3 cents from March 1 levels, suggests there is some compromise.

But the numbers reported to Metal Bulletin—ranging from 90 cents to 97 cents for a mix of deals, bids, offers and assessments—highlighted the extreme views held by different global regions. China’s largest stainless mill, Taigang Stainless Steel Co. Ltd., cut its price again to the equivalent of 89 cents per pound.

Meanwhile, prices are strong in the European and U.S. markets, where ferrochrome producers don’t have to compete with lower-cost Chinese production.

Some chrome producers are angry and say the price cuts are unwarranted and have deliberately been made ahead of price benchmark negotiations between South African producers and Asian and European stainless mills.

They doubt that significant volumes are being sold to China at the lower end of the price range. 

Turkish chrome producers Eti Krom AS and Ekin Maden Ticaret ve Sanayi AS have vowed to cut chrome exports to China until prices improve. But despite protestations, South African material is being sold to China at rock-bottom numbers, with deals reported at 90 cents to 92.5 cents.

Other supplier sources are shrugging off the lower Chinese numbers, saying they are prioritizing sales to regions where prices are higher. 

“Yes, the Chinese prices dropped, but it won’t affect us as much as others because we’re only supplying a small amount (there). European and U.S. prices will see increases, so it’s not such a bad situation,” one supplier said.

Long-term contracts are being honored, but some customers say players in the spot market might end up disappointed if contracts haven’t already been signed, he added. 

South African ferrochrome exports to China are still rising, up nearly 16 percent year on year in January, showing that China still needs South African material to meet its steelmaking needs despite its growing domestic ferrochrome industry.

With production costs soaring and Eskom set to raise electricity prices by 8 percent per year over the next five years, South African producers need to be clear about the levels at which they can remain competitive, setting offer prices and volumes accordingly. 

A version of this article was first published by AMM sister publication Metal Bulletin.

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