China's High-carbon Ferrochrome Output in July Fell on the Month due to the Weak Demand

SHANGHAI, Aug 10 (SMM) - SMM data showed that China's high-carbon ferrochrome output fell by 19,900 mt on the month and up 148,200 mt or 35.94% on the year to 560,600 mt in July. The output in Inner Mongolia was 307,600 mt, up 20,400 mt or 7.1% on the month. The output in Sichuan was 39,000 mt, down 7.8% on the month. In July, the purchasing prices of mainstream steel mills fell by 650 yuan/mt (Cr50%). In addition, the output of stainless steel further declined. Therefore, the demand for high-carbon ferrochrome declined. Although the output of ferrochrome declined, the supply was still in surplus amid the weak demand, hence the prices fell. At the end of the month, due to the high costs, the operating rates dropped significantly. However, the operating rates of most medium and large-sized ferrochrome plants in the north were still high because of the high-priced orders in the early stage and the cost advantage. Therefore, the domestic high-carbon ferrochrome output only dropped only slightly.

The output of high-carbon ferrochrome in August is expected to stand at 497,000 mt, lower than that in July. In the end of July, due to the weak demand and the supply surplus, Tsingshan Group is the first to lower the purchasing prices by 1,000 yuan/mt (Cr50%) in August. Meanwhile, some steel mills reduce the purchase amount and even suspend the long-term orders. Therefore, the demand for ferrochrome further declines. As steel mills reduce the purchase volume, it is more difficult for ferrochrome plants to ship amid the loose supply for retail sales. In addition, the prices of chrome ore and coke continued to fall, hence the ferrochrome prices further decline amid the weak cost support. Due to the low prices, ferrochrome prices focused on the orders of the early stage. It is expected that the output will further decline after mid-August. However, the prices may continue to fall due to the weak demand and low costs.