Losses at Ferrochrome Producers Difficult to Change, Chrome Ore Prices Continue to Decline [SMM Analysis]

Chrome ore prices continued to decline in November. As of November 29, the average price of South African 40-42% chrome concentrate was 53 yuan/mtu, down 3.5 yuan/mtu from the beginning of the month. As of November 29, the total chrome ore inventory at national ports was 2.3187 million mt, up 167,600 mt or 7.79% MoM. The inventory at Tianjin Port was 1.7297 million mt. In November, amid market pessimism, transactions were mainly driven by just-in-time demand, and spot prices of chrome ore fell in tandem with the decline in futures and ferrochrome prices. Although ferrochrome prices fell, the arriving chrome ore was mostly high-priced resources from earlier periods. Some ferrochrome manufacturers faced losses but maintained their cash flow due to electricity contracts and the digestion of previous raw materials, resulting in no significant production cuts and maintaining demand for chrome ore at previous levels.

According to SMM data, the departures of bulk carriers from global main ports reached 1.9015 million mt in November. It is expected that the arrivals at Tianjin Port in December will be about 1.45 million mt. In December, the bidding prices for high-carbon ferrochrome by steel mills fell sharply, causing severe losses for ferrochrome manufacturers, further strengthening expectations for production cuts, and leading to a decline in chrome ore prices. Last week, the overseas quotes for South African 40-42% chrome concentrate significantly dropped to $220/mt, with a shipping date before January 15, translating to a spot price of about 44-45 yuan/mtu, exerting downward pressure on future chrome ore prices. Although the current overseas shipments of chrome ore are basically stable, the continuous price decline has weakened the market's interest in purchasing chrome ore for future delivery, and future supply may gradually decrease. However, due to ferrochrome production cuts, chrome ore demand is also weak, coupled with poor year-end end-use consumption expectations, it is anticipated that chrome ore prices will continue to decline in tandem with ferrochrome prices.