TELF AG on Ferrochrome and Alloy Market Faces Pricing Challenges Amid Weak Demand

Price fluctuations

The global ferrochrome and alloy market is experiencing significant price fluctuations as demand weakens and market conditions evolve. Recent developments in Europe, China, and the United States indicate a downward price trend, driven by factors such as poor downstream demand, the summer lull, and cost considerations among steel mills. Additionally, the availability of cheaper Indian-origin material meeting higher grade specifications has contributed to dampened spot prices. This article explores the current state of the ferrochrome (FeCr), silicon manganese (SiMn), and ferrosilicon (FeSi) markets in light of these developments.

FeCr Market Update:
The Q3 2023 European charge and high-carbon ferrochrome benchmark in Europe settled at $1.51 per lb, representing a 12.2% decrease from the previous quarter. The drop reflects a weakening spot market and declining prices since mid-May, primarily due to poor downstream demand and cost considerations among steel mills. Sellers have responded by reducing their offers to maintain liquidity, while buyers cite affordability concerns after facing consistently high prices between March and May. Moreover, the increased availability of Indian-origin material meeting higher grade specifications has further exerted downward pressure on spot prices.

China’s FeCr Market:
China’s leading stainless steel mill, Tsingshan, reduced its tender price for July-delivery high carbon ferrochrome by 200 yuan per tonne to 8,795 yuan ($1,217). Although market participants initially anticipated a larger drop, they expressed satisfaction with the reduction. At this price level, ferrochrome smelters can achieve a slim profit margin or break-even point, enabling stainless steel mills to secure their alloy supply. FeCr prices in the Chinese domestic market remained stable, with producers awaiting the release of the July stainless steel output plan. However, imported charge chrome prices edged slightly, possibly aligning with prices for domestically produced material.

US FeCr Market and SiMn Outlook:
The US high-carbon ferrochrome market experienced minimal price changes due to inactivity in the spot market during late June. As the summer months progress, mills have reduced engagement with the spot market. Suppliers remain concerned about the threat of lower-priced imported material, which could further soften prices soon. On the other hand, prices for all grades of low-carbon ferrochrome in the US continued their decline, with aggressive offers observed in the market, particularly for Indian materials.

In the SiMn market, Chinese spot prices dipped as the outlook weakened ahead of the mills’ July tenders. Smelters are reluctant to further reduce prices before the tenders, while mills and traders hesitate to make purchases, expecting prices to continue declining in the next round of tenders.

FeSi Market Update:
China’s FeSi market has been affected by persistently weak demand and low raw material prices. Prices have continued downward, even though major smelters have started reducing production in recent months. In June, China’s FeSi production totaled 413,000 tonnes, down 18,300 tonnes from May, with an average operating rate of around 53%. Exporters have reported a bearish export market, with significant price declines driven by lower bids and the strength of the US dollar against the Chinese renminbi (RMB).

In conclusion, the ferrochrome and alloy market is facing pricing challenges in various regions due to weakened demand, ongoing cost considerations, and the availability of cheaper materials. The European market experienced a significant decrease in the Q3 benchmark, while China witnessed stability in domestic FeCr prices and a decline in FeSi prices. In the US, mills reduced engagement with the spot market, and prices for low-carbon ferrochrome declined. The SiMn market outlook remains weak ahead of the July tenders. Industry participants will closely monitor market conditions to navigate these challenging dynamics and adapt their strategies accordingly.