China's High-carbon Ferrochrome Output Fell Slightly to 580,500 mt in June

SHANGHAI, July 12 (SMM) - SMM data showed that China's high-carbon ferrochrome output fell slightly by 11,000 mt on the month and 93,500 mt or 21.5% on the year to 580,500 mt in June. The output in Inner Mongolia was 287,200 mt, a MoM decrease of 29,000 mt or 1%. The output in Sichuan was 42,300 mt, down 2.7% MoM. In June, the prices of steel mills were flat. Although the retail prices gradually fell, some long-term orders of ferrochrome maintained a certain profit. Therefore, the operating rates were stable. The large-scale ferrochrome plants in Inner Mongolia had a higher cost to suspend the production and had greater pressure of long-term orders. Therefore, many ferrochrome plants chose to use low-priced raw materials in the early stage to reduce the cost and lengthen the production cycle. At the same time, the electricity prices in Sichuan were lower amid the wet season. Therefore, although the prices of ferrochrome were low, the ferrochrome plants in Sichuan continued to produce normally due to the cost advantage.

The output of high-carbon ferrochrome in July is expected to be 531,000 mt, lower than that in June. In July, the prices of steel mills continue to fall and the low-priced raw materials are consumed, hence the cost of ferrochrome plants increases. As the steel mills are in losses due to the sluggish consumption, the output of stainless steel is expected to decline. Therefore, the demand for ferrochrome will decreases. The prices of coke and chrome ore fell, hence the cost support of ferrochrome also weakened and the ferrochrome prices fell synchronously. The ferrochrome plants are unlikely to gain profits due to the reduced demand, weakened cost support and the bearish market outlook.