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SMM Analysis: Prediction of Ferrochrome Prices in August amid Extending Oversupply
Jul 27, 2022 09:29CST
Source:SMM
With falling demand for ferrochrome and increasing losses, the operating rates of steel mills in August may drop to a lower level. Meanwhile, traders will hold their prices less firmly as steel mills cut their purchases on chrome ore, hence the prices of ferrochrome are expected to decrease accordingly, and will hardly improve in the short term.

SHANGHAI, Jul 27 (SMM) - Since the Covid-19 pandemic resurged in Shanghai in March, the terminal demand for stainless steel has been weak. While steel mills have reduced the production, the social inventory of stainless steel did not declined significantly. At the same time, the prices of stainless steel have been falling, most plants, which have already suffered losses, intend to reduce the production further. It is expected that the demand for ferrochrome will decline further.

Recently, there were rumours that a steel mill suspended its blast furnaces for maintenance and shut down some steelmaking production lines due to the losses caused by the current sluggish stainless steel market. As a result, the steel mill's production was cut dramatically and its demand for high-carbon ferrochrome also dropped significantly throughout the month. It seemed that the steel mill plans to suspend purchases in the spot market and cancel all the domestic purchases under long-term contracts in August.  

As most steel mills reduced the production recently, the purchase of ferrochrome was cut accordingly, which had extensive impacts on ferrochrome manufacturers. In July, ferrochrome manufacturers had a slight reduction in the production amid amply supply and weak demand. The cost support for ferrochrome prices hardly sustained and the market was basically bearish. At present, the market is not optimistic about sales in September and October, the traditional peak season. With falling demand for ferrochrome and increasing losses, the operating rates of steel mills in August may drop to a lower level. Meanwhile, traders will hold their prices less firmly as steel mills cut their purchases on chrome ore, hence the prices of ferrochrome are expected to decrease accordingly, and will hardly improve in the short term.

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