What’s the Price Trend of High-Carbon Ferrochrome after November's Continuous Drop?

SHANGHAI, Dec 3 (SMM) – The prices of high-carbon ferrochrome kept falling from 10,550 yuan/mt (Cr 50) at the beginning of November to 9,450 yuan/mt (Cr 50) at the end of the month, according to SMM survey. The prices dropped by 1,100 yuan/mt or 10.43% in the month.

Costs: In November, the electricity prices were high across the country, the chrome ore prices fell slightly and then rebounded, and the coke prices kept falling. The second-grade metallurgical coke prices in Inner Mongolia dropped to 2,400 yuan/mt (ex-factory). The production costs declined, and the high-carbon ferrochrome prices had downward room.

Sichuan and Guangxi planned to raise electricity prices at the end of November, while Inner Mongolia planned to lower the electricity prices by 0.11 yuan/kVA. The coke prices varied by region due to different freight costs. The ferrochrome basically had profits on different costs.

Supply: The thermal coal inventory increased, and the prices dropped under the national policy to ensure the coal supply and stabilise prices. The surging electricity prices across the country also recovered the profits of the power generation enterprises. The power rationing caused by power shortage was basically lifted.

Some plants in Sichuan, Shanxi, and Qinghai slightly reduced the production due to environment protection and energy consumption problems, but they could still profit from the ferrochrome production. And they produced for the previously uncompleted orders as well. Thus the output of high-carbon ferrochrome rose sharply to reach a record high in November.

Demand: The prices of stainless steel kept falling amid weak demand, while the ferrochrome output rose more significantly than the stainless steel. The market expects lower bidding prices of high-carbon ferrochrome in December.

However, the high-carbon ferrochrome production in January may be restricted due to the upcoming Beijing Winter Olympics, and the production restrictions on steel mills will ease next year, so the demand of ferrochrome may grow. The ferrochrome supply may tighten then, and the steel mills will restock raw materials in advance.

TISCO, Tsingshan, and Baosteel released the bidding prices for December, which were higher than the market expectations of around 9,200 yuan/mt (Cr 50).

Although the bidding prices were close to the break-even point of some ferrochrome plants in south China, most ferrochrome plants still had profits, and they accepted the bidding prices with high enthusiasm in production. At the same time, some new capacities were put into production. The national output of high-carbon ferrochrome is expected to stand high in December.

The prices of high-carbon ferrochrome are expected to stand stable in the short term. However, the high-carbon ferrochrome output increased sharply in November after the production restrictions eased, and the supply exceeded demand. The retail sources increased in the market, while Tsinghsan only bid for the goods in long-term deliveries. The prices of high-carbon ferrochrome may decline in the future.