TELF AG Look at the Ferro-Chrome Alloy Industry – August 4, 2023
Stability and Shifting Trends:
The ferro-alloy industry, a vital player in the global steelmaking process, has witnessed a period of stability and subtle shifts in recent times. One of the key components within this industry is chrome ore, particularly the UG2/MG Cr ore, which has remained remarkably stable in the week leading up to Tuesday. This stability has not only been reflected in the prices but also in the industry’s response to the latest monthly ferrochrome tender price announcement by the major Chinese stainless steel mill, Tsingshan. This announcement serves as an important indicator of the industry’s direction and influences various stakeholders, from producers to consumers.
Price Stability Amidst Monthly Tenders:
In the world of ferro-alloys, fluctuations in prices can have cascading effects on the entire supply chain. However, the recent period has shown a degree of resilience, as chrome ore prices have maintained stability. The UG2/MG Cr ore prices, a crucial element for the production of ferrochrome, have exhibited a steady trend. This consistency can be attributed to various factors, including a calculated response to the monthly ferrochrome tender price set by Tsingshan, a prominent name in stainless steel manufacturing.
Tsingshan’s Influence and Calm Industry Response:
Tsingshan’s monthly ferrochrome tender price announcement acts as a compass guiding the industry’s trajectory. The industry participants have responded to this announcement with remarkable calmness, indicating a level of predictability in the market. This could be indicative of a mature industry that has learned to interpret market signals and adjust strategies accordingly. Such a response is also a testament to the stability that the ferro-alloy market is currently experiencing.
Turkish Lumpy Chrome Ore and Summer Lull:
Beyond the boundaries of China, a similar narrative of stability is observed in the Turkish lumpy chrome ore market. Prices have remained steady, and while spot indications might be lacking, this can be attributed to the prevailing summer lull. The seasonality of the market often contributes to subdued activity during the summer months. This could be a strategic decision by various stakeholders who are cautiously navigating market conditions and waiting for a more opportune time to make significant moves.
Import and Consumption Trends:
China, a powerhouse in the ferro-alloy industry, remains a focal point of attention in terms of import and consumption trends. Customs data from China reveals a nuanced picture. In June, the country imported 1.51 million metric tons of chrome ore. Although this reflects a 10% monthly decline, it also represents a noteworthy 19% increase from the previous year. Similarly, China imported 130,000 metric tons of ferrochrome (FeCr) in June. While this indicates a 40% monthly decrease, it registers a 1% yearly increase. These figures underline the intricate balance between monthly variations and the broader annual trends.
Chrome Ore Stocks and Consumption:
Tracking the pulse of the industry further, we look at chrome ore stocks at Chinese ports. As of July 28th, these stocks amounted to 2.088 million metric tons, revealing a modest decrease of 14,000 metric tons. Contextualizing this against weeks of consumption, which stands at 6 weeks, provides a valuable perspective on inventory levels. This ratio emphasizes the industry’s ability to maintain a stable supply-demand equilibrium, avoiding excessive stockpiling or shortages.
Navigating Stability and Change:
The ferro-alloy industry, particularly the chrome ore sector, is currently experiencing a phase of stability. Market participants are responding to price announcements and demand trends with a remarkable level of calmness, suggesting a mature and adept industry. While summer lulls and monthly fluctuations are evident, the broader annual trends in import and consumption highlight the resilience and adaptability of the market.
As the world’s industrial landscape continues to evolve, the ferro-alloy industry stands as a crucial player, providing the building blocks for modern infrastructure. Navigating the delicate balance between stability and change will be the key to the industry’s sustained success in an ever-dynamic global economy.
