TELF AG Ferro-alloys Market Update: Chrome Ore Prices Stable, Inventory Build-Up Continues – June 13, 2023
In the world of ferro-alloys, chrome ore has been a key focus in recent weeks. On May 30, UG2/MG prices for chrome ore remained stable, but the market saw some interesting dynamics at play. Chinese buyers reportedly held back from the spot market following a significant increase in the monthly tender price by major STS mill Tsingshan. The price hike amounted to 200 yuan ($28) per metric ton, which led to mixed reactions from smelters.
While some smelters expressed satisfaction with the increase, others argued that it was not sufficient to offset the high costs they were facing. One of the factors contributing to these challenges is the logistical issues on the supply side, which have been providing support to chrome ore prices. However, there are indications that the market may be entering a holding pattern as buyers remain hesitant to pick up chrome ore, and sellers have not yet decreased their offers.
In addition to the price dynamics, there is potential good news on the horizon for smelters in Ningxia, Guizhou, and Guangxi provinces. Reports suggest that electricity costs in these regions could decrease starting from June. This development has the potential to alleviate some of the production costs for smelters, even though ore costs remain elevated.
Turning our attention to port inventories of chrome ore in China, we find a continuing trend of build-up. However, it’s worth noting that most of the new arrivals are reportedly unavailable for sale. This means that despite the inventory growth, there has been no significant increase in availability in the spot market. Consequently, Chinese domestic spot prices for ferro-chrome (FeCr) remained unchanged during the week ending May 30.
The high availability of imported products is one of the contributing factors to the stable domestic prices. However, some industry sources caution that this level of imports is still insufficient to make up for the shortfalls created by smelter closures on the ground in China. The closure of smelters has had a tangible impact on the overall ferro-alloys market, and the industry is keenly observing the developments in this regard.
As we move forward, it will be interesting to see how the chrome ore market evolves. The balance between supply and demand, logistical challenges, and production costs will all play crucial roles in shaping the future dynamics of this important ferro-alloy. Smelters, buyers, and industry observers will closely monitor the potential reduction in electricity costs in certain provinces, as well as any changes in the availability and pricing of chrome ore in the spot market.
