Year-End Ferrochrome Market Slump: Why Have Prices Hit Record Lows? [SMM Analysis]

As the year-end approaches, the ferrochrome market has deviated from the usual winter stockpiling trend, with a pervasive wait-and-see sentiment. Market expectations remain pessimistic, and transactions continue to be sluggish. Ferrochrome producers are facing dual pressures of year-end shipments and cash collection, with high-carbon ferrochrome prices dropping to a nearly three-year low. Retail prices in Inner Mongolia are at 7,200 - 7,400 yuan/mt (50% metal content).

Although December stainless steel production is expected to reach 3.37 million mt, up 90,000 mt MoM, providing a slight boost to ferrochrome demand, domestic ferrochrome producers are generally experiencing losses. Under this pressure, many producers have opted to cut production or suspend operations for equipment maintenance, with production cuts expected to exceed 100,000 mt.

New ferrochrome capacity has been released intensively this year, leading to a severe supply surplus, with the annual surplus expected to exceed 1 million mt. Stainless steel mills have ample raw material inventory, and purchase willingness remains weak, pushing the market into a buyer-dominated phase. Meanwhile, the suspension of ferrochrome production has reduced chrome ore demand, leading to a decline in ore prices and weakening cost support for ferrochrome, further intensifying downward pressure on prices.

With low-priced chrome ore arriving at ports and surplus supplies requiring time to be digested, high-carbon ferrochrome prices are unlikely to recover in the short term. Cost pressure is expected to accelerate the rebalancing of the ferrochrome supply-demand relationship. Moving forward, attention should focus on stainless steel consumption and production schedule dynamics.