【SMM Analysis】Ferrochrome Output Slides Further in September, Cost Inversion Casts Gloomy Outlook

News release, 30 September 2026:

According to SMM statistics, China's high-carbon ferrochrome output in September 2026 fell by 3.17% month-on-month, while rising 18.8% year-on-year. The cumulative high-carbon ferrochrome output for January–September 2026 registered a year-on-year increase of 30.73%.

Domestic ferrochrome production continued to trend lower in September, with output cuts recorded to varying degrees in both northern and southern regions, largely driven by cost inversion. By region, high-carbon ferrochrome output in Inner Mongolia in the north edged down 2.29% month-on-month. Minor production reductions stemmed from equipment maintenance at some plants, yet overall output remained at historically high levels, accounting for a steady 81.74% of the national total. In southern provinces including Guizhou, Guangxi and Hunan, high-carbon ferrochrome output dropped 23.33% month-on-month, and the region’s share of national output shrank to 6.24%, making it the primary source of production decline in September.

On the cost side, coke prices stayed firm at high levels, chrome ore prices adjusted downwards slowly, coupled with rising power tariffs, which pushed up production costs substantially for southern ferrochrome plants. Meanwhile, on the demand side, downstream stainless steel mills aggressively negotiated lower prices. Major steelmakers Tsingshan and TISCO successively cut their ferrochrome tender prices to 7795 RMB/50mt base and 7595 RMB/50mt base respectively, dragging the overall ferrochrome price benchmark down continuously. Trapped in cost inversion, ferrochrome producers were forced to curtail or halt production to avoid heavy losses.

Looking ahead, high-carbon ferrochrome output still has room to decline, though the drop will be relatively limited. On one hand, downstream stainless steel production is expected to contract further, weakening procurement demand. Continuous cuts in steel tender prices have dampened market sentiment, and many producers have drawn up production reduction or shutdown plans. On the other hand, concurrent declines in spot and forward chrome ore prices have eased ferrochrome production costs, alleviating cost inversion to some extent and cushioning the scale of output cuts. In addition, long-term contract orders take up a large proportion of sales with rigid pre-locked volumes. A widespread wave of production shutdowns among ferrochrome plants is unlikely; output is projected to maintain a high-level narrow fluctuation pattern.