In August, stainless steel mills' tender prices slightly declined, and the issue of ferrochrome oversupply remains severe [SMM Analysis]

SMM August 14: In August, the tender prices of mainstream stainless steel mills slightly dropped by 100 yuan/Cr50%, breaking the trend of flat prices over the past four months. Tsingshan's procurement tender price for high-carbon ferrochrome fell to 8,895 yuan/Cr50%. In July, stainless steel production decreased to 3.18 million mt, leading to reduced demand for ferrochrome. Although ferrochrome production also decreased, the decline was not as significant as the drop in demand. Meanwhile, ferrochrome imports have remained high this year, with high-carbon ferrochrome imports reaching 1.9444 million mt from January to June, up 22.95% YoY. It is expected that stainless steel production will rebound to 3.22 million mt in August, but due to the limited decline in procurement prices by stainless steel mills, ferrochrome producers, facing high costs from previous low-price raw material reserves and production halts, have maintained their production levels, leaving the oversupply issue unresolved. According to supply-demand balance calculations, the cumulative surplus of high-carbon ferrochrome from January to August may exceed 1 million mt.

Currently, as the traditional peak consumption season "Golden September and Silver October" approaches, stainless steel mills have strong demand for raw material supply. At the same time, ferrochrome producers are generally experiencing losses, and the expected high costs of chrome ore port arrivals in the near future will somewhat alleviate the downward pressure on ferrochrome prices. However, the issue of ferrochrome oversupply is becoming increasingly severe. Although ferrochrome prices are not expected to drop significantly in the short term, changes in market fundamentals after the peak season may trigger a downward risk in ferrochrome prices.