Ferrochrome Production Further Declined in December; Severe Previous Surplus Keeps Short-Term Weakness Unchanged [SMM Analysis]

According to SMM data, in December 2024, China's high-carbon ferrochrome production continued to decline, down 10.83% MoM but slightly up 0.33% YoY. Among them, production in Inner Mongolia decreased by 5.09% MoM. In December, mainstream stainless steel mills significantly reduced their purchase prices for high-carbon ferrochrome, exacerbating losses for ferrochrome plants and weakening their production willingness. Some ferrochrome plants chose to halt production after depleting their raw material inventory, leading to increased maintenance and production cuts during the month. Combined with the realization of previously accumulated production suspensions, overall production declined. However, large ferrochrome enterprises, which mainly rely on futures chrome ore, maintained a certain level of production despite significant losses due to pressure to recover production funds and restrictions from power supply agreements, limiting the extent of production cuts.

Looking ahead to January 2025, stainless steel production is expected to decline significantly, and market demand for pre-holiday stockpiling is weakening, further softening ferrochrome demand. Previously, the already oversupplied ferrochrome market has become increasingly unable to digest inventory as the Chinese New Year holiday approaches. As a result, some manufacturers have opted for an early holiday, while those still in production mainly focus on long-term contract orders. For new long-term contracts signed in 2025, ferrochrome manufacturers indicated a small margin for supply reduction negotiations. Domestic high-carbon ferrochrome production is expected to continue declining in January 2025.