High-Carbon Ferrochrome Supply Surged but Prices Rose, Increasing Supply-Demand Imbalance Risk [SMM Analysis]

Since Q2 2024, the procurement prices of high-carbon ferrochrome by mainstream stainless steel mills have been rising. As South China transitioned from the dry season to the rainy season, electricity costs decreased, helping restore the profits of high-carbon ferrochrome smelters and significantly boosting their production enthusiasm. In May, the national output of high-carbon ferrochrome reached 792,000 mt, a sharp increase of 49.18% YoY. It is expected that the output in June will exceed 800,000 mt. However, the stainless steel output in May only increased by 6.54% YoY, and it is expected to decline in June, leading to a growth in high-carbon ferrochrome supply far exceeding demand.

Despite the ample supply, high-carbon ferrochrome prices have not fallen but continued to rise. Since Q2, the high output of high-carbon ferrochrome has further exacerbated the domestic shortage of chrome ore, with the price of South African 40-42% chrome ore concentrates rising to over 64 yuan/mtu, driving high-carbon ferrochrome prices higher. However, as the market gradually entered the off-season, downstream stainless steel demand weakened and the expectation of reduced stainless steel production increased, making high-carbon ferrochrome supply appear more abundant. In the short term, due to cost support, high-carbon ferrochrome prices are unlikely to see a sharp drop, but the risk of price decline due to supply-demand imbalance is continuously increasing.