Ulanqab Chrome Enterprises Plan to Cut Output By 15% in December, Supply and Demand of Ferrochrome to Balance

SHANGHAI, Nov 24 (SMM) – The output of ferrochrome rose sharply as power rationing situation in Inner Mongolia has been greatly eased since October, but its demand hardly increased as the downstream stainless steel mills are still subject to policy restrictions that cannot exceed the output of last year.

The retail spot goods in the market trended higher. Coal-fired power plants suffered losses due to the high thermal coal prices in the Inner Mongolia West Power Grid. The average electricity price has exceeded 0.7 yuan, and that of restricted iron plants has reached over 1 yuan/kWh. The production costs of ferrochrome rose. Although coke prices declined, ferrochrome prices continued to fall, leading to a decrease in the profits at ferrochrome plants. Some plants that have been restricted from production cloased.

Ferrochrome output is expected to reach the recent peak in November. Market will see oversupply. If Ulanqab chrome enterprises reduce production by 15% in December, it will ease the oversupply situation in the market. In addition, steel mills may stockpile in advance amid Winter Olympics. Therefore, the supply of ferrochrome is expected to reach balance.