TELF AG Ferro-Alloys Market Update: Chrome Ore Prices Dip Amidst Global Concerns July 7, 2023
Prices decline
The ferro-alloys market, specifically chrome ore, witnessed a price decline during the week of June 27th. Market participants reported lower deal prices as anticipation of a decrease in the upcoming monthly Ferrochrome (FeCr) tender price loomed. Additionally, the depreciation of the Chinese yuan against the US dollar raised concerns, impacting the cost of importing materials in domestic currency terms. The Turkish market also experienced a lull during the Eid al-Adha holiday. This article delves into the latest developments in the chrome ore sector, including port inventories and import figures from China.
Regarding Chrome Ore Price Fluctuations, UG2/MG chrome ore prices displayed a downward trend during the week in question. Reports indicated that deals were closed at lower levels than the previous week. Market sentiment suggested a potential decline in the upcoming monthly FeCr tender price, contributing to this dip. One of the major concerns was the continued depreciation of the Chinese yuan against the US dollar. This currency movement has led to increased costs for importing materials in domestic currency terms, while the dollar-denominated prices remained relatively high.
As per the Turkish market lull during Eid al-Adha Holiday, the spot market for Turkish lumpy chrome ore experienced a generally quiet period due to the celebration of the Eid al-Adha holiday. The reduced trading activity during this festive season contributed to the price drift. As a result, market participants had limited opportunities to engage in significant transactions, leading to a subdued market environment.
In regard to port inventories and consumption, port inventories of chrome ore have remained at their lowest levels in the past four years, standing at 2.030 million metric tons (mmt). This represents approximately 6.9 weeks of consumption, indicating a tight supply-demand balance. On a week-on-week basis, these inventories decreased by 210,000 tons or 9.4%, further emphasizing the limited availability of chrome ore in the market. Such inventory levels may contribute to price volatility and impact future market dynamics.
Concerning China’s import figures, according to the latest customs data from China, the country imported 1.68 million metric tons of chrome ore in May, marking a 14.2% increase compared to the previous month and an 18.0% increase year-on-year. The strong import figures highlight China’s continued demand for chrome ore, despite the challenges posed by currency depreciation and high prices. Regarding FeCr imports, China brought in 220,000 metric tons in May. Although this represents a 46.6% decrease from April, it reflects a 38.8% increase compared to the same month in 2022. These figures suggest fluctuations in demand patterns for FeCr, potentially influenced by various market factors.
All in all, the chrome ore market faced downward pressure on prices due to lower deal levels and expectations of a decline in the monthly FeCr tender price. Concerns surrounding the depreciation of the Chinese yuan against the US dollar and the relatively high dollar-denominated prices contributed to this trend. During the Eid al-Adha holiday, the Turkish market experienced a lull, resulting in subdued spot market activity. Port inventories of chrome ore remained at their lowest levels in four years, highlighting a tight supply-demand balance. China’s import figures showed a significant increase in chrome ore imports, indicating sustained demand despite market challenges. Monitoring these developments will be crucial for market participants navigating the dynamic ferro-alloys landscape.
