UG2 chrome ore price extends gains; Chinese ferro-chrome markets stay firm

The UG2 chrome ore market rose for yet another week on Friday May 29, supported by Chinese buyers’ attempts to restock, and ferro-chrome prices stabilized in firm market conditions.

Fastmarkets’ chrome ore South Africa UG2 concentrates index basis 42%, cif China climbed up for a fourth week in a row to $169 per tonne on Friday, up by $5 per tonne or 3% from $164 per tonne a week earlier. The index is now up $22 per tonne from $147 per tonne at the start of May.

Several deals were reported above the latest index level, showing the bullish run of the chrome ore market continues for the time being.

“Some ferro-chrome producers, especially those in the south [of China], were running out of ore stocks, and they had to purchase even though the prices went higher this week,” a smelter said, adding that portside prices were in excess of 31.50-32 yuan ($4.41-4.48) per dry metric ton unit (dmtu).

On the supply side, South African producers lament ongoing logistical issues that continue to slow down the transport of cargo to ports. The border crossing with Mozambique is still highly congested and trucks can cross over only after long delays. For this reason, Maputo port has reportedly lower than average cargo to handle.

While producers within South Africa are expected to ramp up operations from June 1, the logistical hurdle is thought to continue to hinder the flow of material out of mines.

Some participants believe the transportation issues will support prices further in the near term, others were skeptical of additional price hikes.

“Some ferro-chrome producers have already turned down the offers that were higher than $170 per tonne because they have sufficient stocks for the next months or so,” a trader said. “And even though we are seeing depleting stock levels of chrome ore, there is still a lot at ports.”

Fastmarkets’ assessment of chrome ore inventories at the main Chinese ports of Tianjin, Qinzhou, Lianyungang and Shanghai dropped to 3.56-3.81 million tonnes on Monday June 1, down by 2.9% from 3.65-3.94 million tonnes a week earlier.

Steady alloy markets
Both domestic spot ferro-chrome prices and imported charge chrome prices remained stable week on week on Friday.

Steelmaker Tsingshan Group increased its June high-carbon ferro-chrome tender by 500 yuan per tonne on May 21, with Taiyuan Iron & Steel (Tisco) and Baosteel both following suit to raise their own tenders by the same amount.

As a result, Fastmarkets’ ferro-chrome contract 6-8% C, basis 50% Cr, ddp China jumped to 6,200-6,400 yuan per tonne on Friday, up by 8.6% or 500 yuan from 5,700-5,900 yuan in the previous month. 

This uplift has consolidated the stability in the domestic spot ferro-chrome price. Fastmarkets’ weekly price assessment for ferro-chrome spot 6-8% C, basis 50% Cr, ddp China settled at 6,400-6,600 yuan per tonne on Friday, unchanged from the previous week. 

In the seaborne market, while improved sentiment supported a gradual rise in the imported charge chrome price over the past month, market participants described an existing standoff between buyers and sellers that has capped further rises in the latest assessment.

Fastmarkets assessed the ferro-chrome 50% Cr import, cif main Chinese ports price at $0.73 per lb on Friday, unchanged from the previous week.

Availability of charge chrome from South Africa remains limited due to closures at some mines, and production and shipping delays. Sellers that are still in operation reported significant delays in their ability to put cargo on ships.

On their part, consumers have been experiencing market tightness out of South Africa but have so far been unwilling to commit to consistent new purchases. No liquidity was seen this week, while a deal was reported last week.

“The market is firm right now – and the tightness that we’ve seen so far is not going to ease that quickly,” one seller said.

Because of the shipping delays at origin, it is thought that availability of charge chrome within China will further reduce since local stocks are being sold and not replenished.

“All the shipments for June are late. You won’t be able to ship anything over there for arrival before July – that will necessarily affect market conditions,” a second trader said.

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