steep fall in Chinese ferrochrome prices, attributed to weak
demand from the stainless steel sector and firm ore prices, is
pushing traders out of the market or forcing them to change
their business models, market participants told AMM
sister publication Metal Bulletin.
"This year the market
is very weak. The only way I do business is by finding buyers
first, then finding the cargoes to sell to them," one
ferrochrome trader from Shandong province said.
Another major trader
in Ningbo echoed the sentiment, saying that the majority of
their transactions this year were based on finding buyers
"There is no space for
them (traders). They are quitting and there is no margin at all
because the price is low," another market participant said.
In a strong market,
traders make bulk ferrochrome purchases ahead of finding
buyers, as they are confident of selling material. However, low
prices have dented the mood this year.
price is the key problem. It rose in the beginning of the year
but has been in decline since," the Ningbo trader added.
The spot price of
high-carbon ferrochrome in China was at 6,900 to 7,000 yuan
($1,122 to $1,138) per tonne Sept. 20, down from this
years high of 7,800 to 7,900 yuan per tonne on Jan.
"This is the worst
year (for ferrochrome) since 2008. Last year, traders did not
do business if profits were less than 200 yuan per tonne. Now,
the general margin is only 50 yuan per tonne," the Shandong
In addition to the
weakness of stainless steel market and macroeconomic factors,
firm price of chrome ore and rising freight costs are also
resulting in dwindling margins for traders, sources said.
"Every month the price
(of ferrochrome) is lower. I know a lot (of participants) are
quitting ferrochrome trading but still trading chrome ore," one
source added. "Some chrome ore buyers are also trading and they
have an advantage over the traders (as buyers may be better
aware of price direction)."
are also being forced to adapt their role in the weak market.
"Now nobody can bet on the market, which means more
back-to-back trade in order to reduce the risks," the Ningbo
A version of this
article was first published in AMM sister publication Metal