TELF AG examines Ferro-Alloys Market Update – August 23, 2023
Rise in Chrome Ore Prices Driven by Chinese Demand and Supply Constraints
In recent developments within the ferro-alloys market, the spotlight has turned to chrome ore as prices for UG2 Cr ore experienced a notable uptick. The price surge can be attributed to increased demand from Chinese smelters, who sought to replenish their stocks amid constrained port inventories. Fastmarkets’ data collection revealed that port inventories of chrome ore in China ranged from 1.98 million to 2.26 million tonnes during the week leading up to last Monday, maintaining relative stability compared to the previous week. However, this inventory level is only sufficient to cover slightly over a month’s ferrochrome (FeCr) production in China, a point highlighted by industry insiders.
The rally in chrome ore prices had a cascading effect on the domestic Chinese market for ferrochrome. The uptick in chrome ore costs and higher coke prices translated into an upward movement in FeCr prices within the Chinese domestic market. This increase followed a similar trajectory to imported charge chrome prices, which also saw an upward trend. This alignment in pricing trends between domestic and imported charge chrome speaks to the interconnectedness of these markets.
Beyond China, the impact of these market dynamics was also felt. Turkish lumpy chrome ore prices saw a modest increase, bolstered by a general improvement in sentiment, particularly on the buy side. This underscores the broader ripple effect of changes in one market segment on others.
A notable factor contributing to the overall stability and strength of both chrome ore and FeCr prices is China’s robust stainless steel (STS) output. The sturdy demand for STS has provided support to the ferro-alloys market. Additionally, persistent logistical challenges in South Africa have played a role in shaping market dynamics. These challenges have created an environment where supply constraints intersect with growing demand, ultimately influencing price movements.
In particular, the recent surge in ferrochrome (FeCr) prices appears to affect the stainless-steel sector primarily. However, it’s important to note that there remains potential for enhancement in the broader demand landscape. With the ongoing escalation of feni prices, steel mills could encounter difficulties sustaining their backing for ferrochrome producers as the costs of acquiring FeCr continue to climb. Amidst the backdrop of somewhat subdued demand, it’s pertinent to acknowledge that challenges are not confined solely to demand; the supply side, too, is grappling with its distinct set of complexities. Considering these dual dynamics, a sense of anticipation emerges that the market might navigate toward a state of equilibrium in the foreseeable future.
In conclusion, the recent fluctuations in the ferro-alloys market, particularly in chrome ore and its derived products, highlight the delicate balance between demand and supply. Chinese smelters’ efforts to replenish stocks, coupled with constrained port inventories and the interplay of multiple market variables, have led to shifts in pricing across the ferro-alloys sector. As the industry continues to navigate these dynamics, the coming weeks will likely provide further insights into how these factors will continue to shape market trends and prices.
