China Produced Less High-Carbon Ferrochrome in January on Poor Demand and High Costs

SHANGHAI, Feb 9 (SMM) - According to SMM statistics, the output of high-carbon ferrochrome in January stood at 494,000 mt, down 19,500 mt or 3.8% from the previous month and down 57,900 mt or 10.49% on the year. The output in Inner Mongolia was 310,500 mt, down 16,300 mt or 4.99% MoM, and that in Guizhou stood at 16,500 mt, down 43.88% MoM.

Various stainless steel mills were overhauling and reducing production during the slow season at the beginning of the new year. Meanwhile, higher electricity fees and power rationing during the low-water period in south China caused ferrochrome manufacturers in the south to lower their operating rates. But the commissioning of new capacity in north China which had cost advantages ensured some profits, keeping the output in north China stable.

The output of high-carbon ferrochrome in February is expected to be 525,000 mt, which is higher than that in January. Although the peak season has not yet arrived, the remarkably higher production schedules of stainless steel in February will boost demand for ferrochrome. Bid prices by steel mills in February also shot market expectations. The high ferrochrome prices incentive producers to step up or restart production.

However, due to the low inventory and the shortage of arriving shipments, the chrome ore prices have gained ground. This in turn eroded profits of ferrochrome production. In the meantime, the consumption of stainless steel has not really improved. As such, the producers will stand on the sidelines before deciding to resume production.