TISCO's November high-carbon ferrochrome tender released ahead of schedule; ferrochrome prices still on a downward trend amid surplus [SMM Analysis]

This week, TISCO's high-carbon ferrochrome tender showed unusual proactivity, releasing ahead of Tsingshan's tender. The new price fell by 150 yuan/mt (50% metal content) MoM to 7,945 yuan/mt (50% metal content), breaking below the 8,000 yuan/mt mark.

This price reduction aligns with the market's previous expectation of a 100-200/mt yuan decrease. Although retail prices are approaching tender prices, there has not been a significant drop. Despite the worsening losses for ferrochrome producers, there has not been a notable increase in production cuts or maintenance shutdowns.

Recently, the overseas quote for South African 40-42% chrome ore concentrates has stabilized at $270/mt, expected to arrive in mid-December; at the current exchange rate, the expected spot cargo cost is about 54 yuan/mtu. Due to previously high costs, chrome ore traders are still in a loss-making state. Although prices are gradually decreasing, they remain at a high level, with room for further decline in the short term. The current ferrochrome tender price has already taken into account the low prices of chrome ore quotes. Coupled with the unresolved supply surplus within the year, this has led to passive pricing in the chrome market.

Chrome ore port inventory is not high, with the main market issue lying in ferrochrome. Navigating through the ferrochrome surplus cycle and waiting for downstream demand to pick up is key. If ferrochrome producers do not significantly cut production, the rate of decline in chrome ore prices will also slow, adjusting gradually with the tenders. The November tender price reduction aligns with market expectations, and the pressure on chrome ore is within a predictable range, with limited short-term decline expected. It is anticipated that low-priced chrome ore will arrive after December, further reducing ferrochrome costs. Considering the difficulty in digesting the ferrochrome surplus within the year, ferrochrome prices may continue to fall.