China's High-carbon Ferrochrome Output Rebounded in May and is Expected to Decline in June

SHANGHAI, June 10 (SMM) - SMM data showed that China's high-carbon ferrochrome output rebounded in May, with a MoM increase of 6.48% to 591,500 mt, a YoY increase of 113,000 mt or 23.62%. The output in Inner Mongolia was 290,100 mt, a MoM increase of 27,900 mt or 10.64%. The output in Sichuan was 43,500 mt, up 40.32% MoM. As the environmental inspections in Inner Mongolia completed, the production resumed. In addition, as large-scale ferrochrome manufacturers in Inner Mongolia mostly use futures raw materials, the cost remained low and the profits were maintained. In this case, the ferrochrome factories actively produced with high operating rates. The electricity prices dropped amid the wet season in Sichuan, and the electricity cost with captive power plants dropped to around 0.4 yuan/KVA, hence the output in the region increased.

The output of high-carbon ferrochromium in June is expected to be 538,000 mt, which will be lower than the output in May. The port inventory of chrome ore remains low, and the arrivals at port are expected to be low as well in June. In this case, the prices of chrome ore are high, and the profit of some ferrochrome plants will fall into the negative zone. The stainless steel output has declined for months as the finished products inventories have been high and the steel mills are in losses due to the sluggish consumption caused by the pandemic. Therefore, the demand for ferrochrome decreases. With the high output of ferrochrome in May, the supply is currently sufficient, and the prices are likely to fall. Recently, most ferrochrome factories have run out of their inventories of low-priced raw materials stored in the early stage, and some small and medium-sized ferrochrome factories have to suspend the purchase of raw materials, and choose to reduce or suspend the production for maintenance due to the high ore prices and high costs. However, the supply and demand will gradually balance again with the production reduction, eased pandemic, and the national economic stimulus policies.