SHANGHAI, Aug 25 (SMM) - According to the General Administration of Customs, China's imports of chrome ore were 1.20 million mt in July 2022, down 68,400 mt or 5.39% from the previous month, and up 181,800 mt or 17.85% on the year. Chrome ore imports from South Africa stood at 931,800 mt, an increase of 44,200 mt or 4.98% mt on the month, and a year-on-year growth of 167,900 mt or 21.97%. Chrome ore imports totalled 8.93 million mt from January to July 2022, up 138,100 mt or 1.57% year-on-year.
According to SMM research, the downstream and terminal consumption of stainless steel was still weak. Although the output of ferrochrome declined, the reduction in production lagged behind the contraction in demand, resulting in an oversupply. In this case, ferrochrome prices kept falling, which brought losses to ferrochrome plants. Nonetheless, future production cuts can be expected, and the demand for ore was muted. Under the situation of production reduction induced by losses, the ferrochrome plants ha a poor acceptance of high-priced chrome ore, and mainly consumed its own raw material inventory. As such, the overall transaction volume of the chrome ore was relatively low amid suppressed demand. And neither falling imports nor low port inventory could stop chrome ore prices from falling.
In August, stainless steel mills further reduced their purchases, and the situation of oversupply in the ferrochrome market intensified, keeping ferrochrome prices on the downward track. In this case, ferrochrome plants continue to cut or suspend the production, resulting in even weaker demand for ore. On the other hand, although the raw material inventory held by the ferrochrome plants has been exhausted, most plants purchase on rigid demand in small amount amid the bearish outlook on chrome ore prices, and are quite cautious. As the demand stays poor, chrome ore traders become less firm to their prices. And in light of further production cuts by ferrochrome plants and recovering ore arrivals at ports, chrom ore prices are expected to keep falling.
