SHANGHAI, Sep 29 (SMM) – The impacted regions: Guangxi, Inner Mongolia, Guizhou, Hunan and surrounding regions

Power rationing summary

Guangxi: Guangxi Industrial and Information Technology Bureau released the notice on strengthening energy-saving dispatching in high-energy-consuming industries. The notice stated that production restrictions at high-energy-consuming enterprises, including aluminium, alumina, steel, ferroalloy, cement, lime, and building ceramics, will commence in September.

The impact and analysis on the supply end

The main producing areas of high-carbon ferrochrome, including Guangxi, Guizhou, and Inner Mongolia, have seen power rationing. The consumption of chromium ore has declined. In addition, the raw material inventory at ferrochrome producers is abundant in the previous period, and production restrictions are expected to continue. High-carbon ferrochrome plants reduced restocking volume. Nationwide chrome ore port inventory increased 6.89% or 236,000 mt from early August.

The impact and analysis on the operating rates of downstream producers

High-carbon ferrochrome output declined sharply on the month in July and August. The output stood at 412,400 mt and 485,200 mt respectively in July and August, down 27.2% and 5.05% MoM. All of the producers in Guangxi have suspended production in September. The power rationing in Inner Mongolia, Guizhou and Hunan intensified. The output is expected to be less than 400,000 mt in September.

The impact on end-producers and company voice

The output of ferrochrome was insufficient, and the early orders placed by mills have not been completed. The price of high-carbon ferrochrome trended higher, ramping up the production costs at stainless steel mills; the output at stainless steel mills is expected to decline due to the power rationing. Besides, the raw material prices of ferrochrome and ferronickel increased, pushing up steel prices. The profit profile of stainless steel was not significantly affected.

Price trend and market outlook analysis

Approaching the bidding of steel mills, the power rationing and the dual control policies continue, ferrochrome production is unlikely to return to normal, and high-carbon ferrochrome output will find it difficult to increase. Ferrochrome prices have increased recently, but downstream stainless steel mills also reduced output. Weak supply and demand suppressed the upward room for ferrochrome prices.

Price change

The high-carbon ferrochrome prices increased 72.22% from early 2021 until now in Inner Mongolia.