[SMM Analysis] Ferrochrome demand peaks in July, with a slight increase likely in August

According to SMM data, China's high-carbon ferrochrome production saw a significant increase in July 2025, with a MoM growth rate of 7.52% and a YoY increase of 1.92%. Specifically, Inner Mongolia's production increased by 5.37% MoM, while production in southern regions such as Sichuan, Guizhou, and Guangxi increased by 18.53% MoM. Environmental protection checks in northern Inner Mongolia officially concluded, allowing producers previously restricted by peak-shaving measures to resume normal production. Southern regions like Sichuan leveraged the advantage of lower electricity prices during the rainy season to control production costs, leading to a steady increase in ferrochrome production. Additionally, the tender price for high-carbon ferrochrome in July exceeded expectations and remained flat, marking three consecutive months of fluctuating at highs. This has, to a certain extent, guaranteed the profit margins of ferrochrome producers, boosted their production enthusiasm, and led to a significant increase in ferrochrome output, reaching a peak in 2025. Meanwhile, overseas ferrochrome smelting operations remain largely suspended, reducing the total volume of imported ferrochrome and leading to a persistent shortage in supply during the first half of 2025. Coupled with the slight recovery in the downstream stainless steel market, where production cut plans have not been fully implemented, demand for ferrochrome has relatively strengthened. Ferrochrome producers are actively producing to bridge the supply-demand gap, maintaining a stable market for ferrochrome.

Looking ahead to August 2025, high-carbon ferrochrome production is expected to continue rising slightly. On July 23 and 25, TISCO and Tsingshan successively announced their August high-carbon ferrochrome procurement tender prices at 7,645 yuan/mt (50% metal content) and 7,995 yuan/mt (50% metal content), respectively, representing a MoM decrease of 200 yuan and 100 yuan. The decline in tender prices was better than expected, boosting market confidence in the ferrochrome sector and maintaining a high level of production enthusiasm. Furthermore, stimulated by macro tailwinds such as the national anti-"rat race" competition policies and major infrastructure projects, the downstream stainless steel market has strengthened, with futures and spot prices rising and market activity gradually recovering. Expectations for production cuts have weakened, and demand for ferrochrome is expected to increase. Meanwhile, there is no news of overseas ferrochrome smelting resuming production, and the import supply gap needs to be filled by domestic producers, which will further drive up ferrochrome production.