Will the Ferrochrome Prices Remained High as the Bidding Prices Heightened?

SHANGHAI, Nov 3 (SMM) - Tsingshan Group disclosed on October 29 its purchase price, which was earlier than the previous month, for high-carbon ferrochrome in November at 10495 yuan/mt (Cr 50%/in cash, tax included, delivery to factory), up 500 yuan/mt from a month ago. And the purchase price at Tianjin port is 150 yuan/mt (Cr 50%) lower with the delivery due on December 10, 2021.

According to SMM research, Tsingshan’s purchase price for high-carbon ferrochrome in October stood at 9995 yuan/mt (Cr 50%), which was flat from August, on the back of high retail prices of high-carbon ferrochrome amid rising electricity prices in Inner Mongolia and short supply in September.

The power rationing eased in October after the rising electricity prices in Inner Mongolia and Guangxi have made up for the production costs of coal-fired power generation plants. While the energy consumption control policy also came to a temporary end in Sichuan. The overall supply of high-carbon ferrochrome heightened amid higher operating rates though the power rationing was still intense in Guizhou, Hunan and Qinghai.

Since the mainstream purchase price of steel mills through bidding were low in October, the high retail prices could hardly lead to any transactions. As such, the NPI plants have to lower their quotations. Meanwhile, the electricity generation costs are likely to drop amid the government’s regulations over coal supply and prices, pushing up the supply of electricity. The power rationing policy will ease gradually, coupled with the rising electricity prices. The NPI plants have a higher consensus with the purchase prices of leading steel mills, thus the retail prices followed the level of purchase prices.

Generally speaking, the high-carbon ferrochrome prices have been high since July amid short supply due to intensive coal-fired power rationing in Inner Mongolia. While the supply of high-carbon ferrochrome has picked up recently after the power rationing was eased. But the demand from downstream stainless steel mills was suppressed by constant production reductions. The rising electricity prices and high coke prices have lifted the production costs of high-carbon ferrochrome. The pattern of short supply has changed recently, as the high-carbon ferrochrome was strongly correlated with high costs and more influenced by the demand side.

Going forward, though the prices of high-carbon ferrochrome are unlikely to see major changes, the impacts of policies and demand are worth of attention.