SMM analysis on China June high-carbon ferrochrome output and July forecast

According to SMM, in June, China's high-carbon ferrochrome production further broke historical records, reaching 801,000 mt, up 9,000 mt MoM (+1.14% MoM) and 200,700 mt YoY (+33.43% YoY). Among them, the production in Inner Mongolia was 537,100 mt, up 14,600 mt MoM (+2.79% MoM), and that in Sichuan was 38,800 mt, up 21.25% MoM. The bidding price for high-carbon ferrochrome from mainstream stainless steel mills remained high. Although the price of chrome ore further strengthened, elevating the cost of high-carbon ferrochrome smelting, the retail price of high-carbon ferrochrome also climbed. Additionally, as high-carbon ferrochrome manufacturers still had profits based on low-price raw material inventories from earlier periods, they kept production enthusiasm high. Furthermore, since some production lines resumed and Sichuan officially entered the rainy season, the overall high-carbon ferrochrome production in June increased.

The production of high-carbon ferrochrome in July is expected to be 785,300 mt, slightly down from June. Stainless steel mills kept July procurement prices of high-carbon ferrochrome flat, which have held stable since April. The continuous high operation rate of high-carbon ferrochrome manufacturers led to a slight shortage in chrome ore supply, elevating chrome ore prices. Consequently, the profits of high-carbon ferrochrome manufacturers were gradually eroded, and some have already suffered losses in July. Moreover, entering the traditional off-season, stainless steel saw sluggish sales. Stainless steel mills are expected to reduce production, leading to a decrease in demand for high-carbon ferrochrome. However, the high scheduled production of high-carbon ferrochrome led to a significant surplus within the year. Since June, retail sales have shown weakness, and high-carbon ferrochrome manufacturers have a pessimistic outlook for the future, with declining production enthusiasm.