Ferrochrome Tender Price Remains Stable; Divergence in Supply and Demand Prices Awaits Resolution [SMM Analysis]

Recently, Tsingshan Group announced the tender price for high-carbon ferrochrome in March, set at 6,995 yuan per mt (50% metal content), remaining unchanged from the previous month. This stable price trend defied the market's earlier expectations of an increase. After the Chinese New Year, chrome ore prices rose rapidly, leading to higher production costs for ferrochrome producers and creating a significant price spread with steel mills' tender prices. Due to the low operating rate of ferrochrome producers, most only maintained production for long-term contract orders. Coupled with stockpiling demand before the Chinese New Year, the retail supply of ferrochrome has remained tight recently.

Since February, annual maintenance at stainless steel mills has largely concluded, and production has gradually returned to normal. By March, the planned production of stainless steel exceeded 3.4 million mt, and demand for ferrochrome is expected to increase accordingly. Market expectations for steel mills' tender prices remain optimistic, with retail prices of ferrochrome continuing to rise. Ex-factory prices in Inner Mongolia have reached approximately 7,600 yuan per mt (50% metal content).

The short-term divergence between ferrochrome retail prices and steel mills' tender prices is likely to persist. Although large stainless steel mills have sufficient supply, the overall market remains short of stock. The low tender prices from steel mills in March have significantly dampened the production enthusiasm of ferrochrome producers, potentially exacerbating shortages in the retail market. However, as demand for chrome ore weakens, domestic port inventories may gradually increase, making it difficult for chrome ore prices to sustain their previous upward trend. Currently, the rising stainless steel production is gradually restoring balance in the supply-demand relationship for ferrochrome, and the losses faced by ferrochrome producers may not be sustainable in the long term. Future developments in stainless steel production and consumption warrant close attention.