June Review and July Outlook of High-Carbon Ferrochrome [SMM Analysis]

In June, high-carbon ferrochrome prices first rose and then fell. The average price of high-carbon ferrochrome increased by 50 yuan/mt (Cr50%). As of June 28, the ex-factory price of high-carbon ferrochrome natural lump in Inner Mongolia was 8,900-9,000 yuan/mt (Cr50%, tax including, by cash). In June, mainstream stainless steel mills continued to keep bidding prices for high-carbon ferrochrome flat, with Tsingshan Group remaining bidding prices stable at 8,995 yuan/mt (Cr50%). Although stainless steel demand weakened amid the off-season in June, stainless steel mills maintained high operating rates. Therefore, the demand for high-carbon ferrochrome did not show a significant decline. Overall, the long-term orders from stainless steel mills remained relatively stable. With the increase in high-carbon ferrochrome prices due to rising costs, retail transactions have been sluggish since June, and retail prices began to fall at the end of June.

Although the high-carbon ferrochrome bidding prices in July continued to be announced as stable, market confidence has significantly declined. Recently, with the continuous decline in stainless steel prices, some stainless steel mills suffered losses and showed a clear willingness to drive a hard bargain on the prices of raw materials such as NPI and ferromolybdenum. The continuous high bidding prices in recent months and the high operating rates of high-carbon ferrochrome manufacturers led to a sustained increase in supply, resulting in a clear oversupply trend. Currently, high-carbon ferrochrome prices are mainly supported by the high cost of chrome ore, but this is unlikely to change the oversupply of high-carbon ferrochrome. If the stainless steel consumption further weakens, stainless steel mills may reduce production due to losses. As a result, the costs alone will barely support high-carbon ferrochrome prices.