August was a slow month for the Chinese chrome market:
According to FerroAlloyNet, in August, the Chinese HCFeCr production was 479,900 tons, which was 9,500 tons less than in July (488,400 tons) and 3.82% less year-on-year (August 2018 production was 497,900 tons).
Customs data shows that China imported 223,900 tons of HCFeCr in August which is a decrease of 15.45% (40,900 tons) compared with the previous month.
The main sources are shown below in Figure 1. The cumulative amount of imported ferrochrome from January to August was 2,321,200 tons.
[caption id="attachment_14688" align="aligncenter" width="700"] Figure 1. Main Sources of Chinese HCFeCr imports China (August)[/caption]
The imported HCFeCr price slightly increased by 0.01 USD/lb Cr in August. However, due to a weakening CNY vs. the USD in August, the increase is mostly due to the change in the exchange rate.
Chrome ore market
The production costs for Chinese ferrochrome plants have been on the rise and ferrochrome prices have been disappointing putting pressure on profit margins. Therefore, plants do not want to buy more chrome ore and increase ferrochrome production. At present, both buyers and sellers of chrome ore prefer to wait-and-see. With the implementation of environmental protection policies and a national policy to reduce heavy traffic before the national day holiday in early October, the situation may not be resolved soon.
Most South African chrome ore suppliers are not eager to quote on enquiries, and the prices quoted are largely maintaining the current price level. However, last week a large South African supplier offered South African 40-42% chrome concentrate at a price of 148 USD/mt, CIF China. Although this price is only offered for their long-term customers, it still aroused controversy.
There are reasons to question this price decrease:
- Recently, the exchange rate of the Rand against the US dollar has gradually increased, and the export cost has gone up slightly. In addition, the strike of local truck drivers in South Africa has affected the inland logistics system, and the sea freight rate has also risen by 10 USD/mt recently. These factors are supposed to increase the export costs for chrome ore;
- South Africa's mainstream suppliers appear not to have pressure to ship and therefore, there seems to be no pressure to adjust the price at this moment;
However, the following arguments need to be weighed in:
- Chinese environmental protection policy, high production cost, and weak ferrochrome demand have led to plant shutdowns or production cuts. Stainless steel mills are slow to buy ferrochrome. Chrome ore suppliers have to consider this market situation;
- It may be true that chrome ore suppliers have not had major pressure to sell at present, but considering that the Chinese will be on holiday at the beginning of October, it is possible that some suppliers adjust the price now to stimulate some purchases;
So far, it seems that the chrome ore price remains stable and other South African chrome concentrate suppliers have not followed suit. From now until early October, the chrome market is expected to be quiet. If the chrome ore market continues to lack demand, there will be downward pressure on the price.
Do you buy or sell Chrome or Ferrochrome? Login or register for our marketplace to boost your efficiency and expand your business with no additional effort!
Follow us on Linkedin and get further market insights!