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 wont 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 cant cut their offers because they dont have
the spot material, and that they soon will not have the
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
ranging from 90 cents to 97 cents for a mix
of deals, bids, offers and assessmentshighlighted the
extreme views held by different global regions. Chinas
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 dont 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 wont affect
us as much as others because were only supplying a small
amount (there). European and U.S. prices will see increases, so
its 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 havent already been signed, he
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.