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FeCr prices to slide after short-lived stabilization

URL: http://www.ferroalloynet.com/news/fecr_prices_to_slide_after_shortlived_stabilization.html
Posted: Fri, 21 Apr 2017 10:11:00 GMT [2 days ago]
Keywords: ferrochrome
Channel: Chinese Industry News
Tags: Ferro Chrome
Summary: Prices will be pressured by the decrease in chrome ore quotes, but only slightly due to consolidated supply. China required , t of Cr ore in February, but consumers were actually using the ma...

Prices will be pressured by the decrease in chrome ore quotes, but only slightly due to consolidated supply. China required 800,000 t of Cr ore in February, but consumers were actually using the material they had in stock and only bought 400,000 t. Low purchases by FeCr producers have resulted in an upturn in port stock levels by 700,000 t to 2.1 million t. Nonetheless, South African merchants are only giving small discounts (down $18/t in a monthly comparison), thinking buyers will have to resume purchases once they run out of their inventories. However, FeCr producers will most likely cut output due to low profitability. Chrome ore purchases will be reduced as a result, and FeCr demand will be covered by the increased imports. Despite high potential for a decrease, consolidated supply will underpin prices, so they will be losing a mere $20-30/t monthly.

Global HC FeCr prices have been coming up in late March due to stronger Chinese demand, either staying unchanged or sliding over the whole month in the most of regions because of the decrease in the middle of March. According to Metal Expert, upward trend in China can hardly last for long. Local producers are more likely to raise output rather than import the alloy if global prices keep climbing. They raised the manufacture in January-February, so now there is an excess of the material in the market (a fifth of the actual consumption). There are also 2,100 t of chrome ore at the country’s ports, which is enough to work for two months. High inventories will not let the ore quotes and production expenses come up further.

Whereas lately last year sellers cited higher prices to ship FeCr to China, now they cannot do that. South African FeCr has been available at $1.13-1.14/lb Cr CIF in China in late March and Kazakh material – at $1.19-1.24/lb Cr CIF. Given that European prices are quoted at $1.32/lb Cr DDP, Chinese purchases have to get 7-10% higher to drive global quotations up again. Nonetheless, this will allow other merchants to lift quotes, too, but only temporarily due to low demand.

It was quite advantageous for South African producers to keep Cr ore prices from a decrease before the announcement of the Q2 benchmark price for South African charge chrome. Due to that, they have managed to cut the price by a mere $0.11/lb Cr to $1.54/lb Cr DDP Europe. Given that some 10-15% discounts are available, the benchmark price is now comparable to the European spot prices.


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