Consumption Peak Season Fails to Boost Chrome Sector, Overall Surplus: Can Chrome Ore Prices Stand Out? [SMM Analysis]

Despite entering the traditional "September-October peak season," demand for stainless steel has yet to rebound, and stainless steel finished product prices continue to decline. The production cost of stainless steel has already resulted in losses, and steel mills have increased their intention to drive a hard bargain on raw materials. Meanwhile, this year, the supply of ferrochrome is significantly surplus, and the market holds a pessimistic outlook for next month's ferrochrome steel tender.

Pre-holiday procurement demand coupled with high operating rates of ferrochrome manufacturers has led to sustained demand for chrome ore, causing port inventory to decline further recently. As of September 13, national port inventory had dropped to 2.179 million mt. However, according to SMM data, the cumulative port departures from global main ports in August totaled 2.6023 million mt, and the departures as of September 12 were 1.1942 million mt. It is expected that by September 27, the arrivals at Tianjin Port will be approximately 1.5629 million mt. Overall, the supply of chrome ore in September will remain at a high level.

Despite the current weak peak season and the widespread losses faced by ferrochrome manufacturers, few have significantly halted or reduced production, and the demand for ferrochrome remains substantial. Chrome ore port inventory remains low, and most of the recently arrived chrome ore is high-cost stock sourced at around $320/mt, leaving limited room for traders to offer discounts. Although there are market rumors that overseas chrome ore futures might further decline, the overall performance of chrome elements this year has been surplus, and downstream consumption growth is hard to expect. Overall, while chrome ore prices are unlikely to escape a weakening trend, their price support is stronger than that of ferrochrome. Coupled with the relatively concentrated supply, chrome ore is expected to show a gradual decline, with a low likelihood of a sharp drop in the short term.