Post-Holiday Surge in Chrome Ore Prices: Supply-Demand Imbalance Remains Unresolved, Bullish Expectations Materialize Ahead of Schedule [SMM Analysis]

SMM, December 21:

This week, a major South African mine announced a new round of futures offers for 40-42% chrome concentrate, with three price options available: $245/mt for 5,000 mt, $250/mt for 10,000 mt, and $255/mt for 15,000 mt, with shipment scheduled for late April. The equivalent price in yuan has reached 50-52 yuan/mtu, which is roughly in line with current port spot prices. After the Chinese New Year holiday, chrome ore prices showed strong momentum, rising rapidly. Futures prices increased by $50/mt over two weeks after the holiday, while spot prices rose by 4.5 yuan/mtu.

Although the current operating rate of ferrochrome plants is relatively low, the decline in stainless steel production in January was less than expected. After the holiday, retail supply in the ferrochrome market tightened, and prices rose accordingly, restoring market confidence. Against this backdrop, ferrochrome producers that had previously halted production showed increased willingness to resume operations. Before the holiday, chrome ore futures prices had fallen to a near two-year low of $200/mt, while overseas mines showed low willingness to sell, resulting in relatively small trading volumes. According to SMM shipping data, as of February 19, global chrome ore shipments totaled only 1.366 million mt, with monthly shipments expected to be below 1.9 million mt, significantly lower than the 2.5457 million mt recorded during the same period in 2024. Chrome ore port arrivals are expected to decrease further after March. This bullish outlook has driven domestic ferrochrome producers and traders to actively purchase, pushing up chrome ore prices.

However, as of last week, national port inventories of chrome ore had recovered to 3.1271 million mt. The cumulative surplus of ferrochrome in 2024 has yet to be digested, and supply and demand for ferrochrome in January and February remained largely balanced. There has been no fundamental change in the supply and demand dynamics for domestic chrome ore and ferrochrome. The primary issue lies in the uneven distribution of supply, with large stainless steel mills having ample raw material reserves, while retail supply in the ferrochrome market remains tight. The prolonged lack of shipments from overseas mines has exacerbated supply shortage sentiment in the chrome ore market. Against the backdrop of low prices and bullish market expectations, ferrochrome and chrome ore prices have rebounded. However, the current supply-demand imbalance has not been fundamentally reversed, and the recent price increases are largely an early realization of expectations. Future developments will depend on actual stainless steel production schedules and consumption trends.