Chrome Ore Prices Remained Strong in June, Demand Was Strong But Risks Accumulated [SMM Analysis]

In June, chrome ore prices remained strong. By June 28, the average price of South African 40%-42% chrome concentrates was 64.5 yuan/mtu, an increase of 2 yuan/mtu in June. The total chrome ore inventory at national ports was 2.7862 million mt, up 0.7% MoM. The inventory at Tianjin Port was 2.1452 million mt.

As high-carbon ferrochrome producers maintained high operating rates in June, the demand for chrome ore remained strong. Although port arrivals increased, overall port inventory stayed stable. The price of South African 40%-42% chrome concentrates scheduled for shipments in late August has reached $320/mt, and it is expected that by the end of September, the spot cost of South African chrome concentrates will generally be above 64 yuan/mtu. Currently, with strong demand and further increases in future costs, traders are unwilling to sell at low prices, and spot prices for chrome ore rise along with future prices.

According to SMM, as of June 27, the shipments from major ports worldwide in June were 2.1939 million mt. Domestic shipping reports indicate that by July 25, the expected port arrivals of chrome ore at Tianjin Port will be 1.1072 million mt. Although the imports of chrome ore in July will not increase significantly, it is expected to remain at a high level. As stainless steel mills kept high-carbon ferrochrome bidding prices stable in July, high-carbon ferrochrome manufacturers had no plans to reduce production. However, the market has gradually entered the traditional off-season, with frequent news of stainless steel production cuts. Therefore, the high-carbon ferrochrome oversupply caused by previous high operating rates intensified, weakening market expectations for the future. Currently, the inventory-to-sales ratio of chrome ore is at a low level. However, with the market's generally pessimistic outlook, the risk of weakening chrome ore prices is gradually accumulating.