China: Firm chrome ore costs to bolster ferro chrome prices in Apr'25

• Many smelters cut output in Mar amid falling profits
  
  
• TISCO, Tsingshan lift ferro chrome procurement tags
  
  

Mysteel Global: China's ferro chrome market is expected to continue its strong upward traction over this month, underpinned by persistently high chrome ore prices and resilient demand from stainless steel producers. However, domestic ferro chrome smelters were slower to ramp up output in March than expected, largely due to their squeezed profit margins, Mysteel Global observed.

On 10 April, Mysteel assessed prices of high-carbon ferro chrome (55% Cr) in North China's Inner Mongolia at RMB 8,500/tonne (t) ($1,166/t), representing a sharp increase of RMB 900/t ($123/t) from the previous month.

The price rally in the ferro chrome market was mainly supported by firmer chrome ore prices, which offered a solid cost floor. By 10 April, CIF prices of 40-42% chrome concentrate imported from South Africa to Tianjin had surged to $275/dry metric tonne (dmt), up by $25/dmt m-o-m and marking a new high since last October.

Domestic portside ore prices saw even stronger gains. Mysteel's assessment placed prices of 40-42% chrome concentrate at the Tianjin Port at RMB 62/dmtu ($8/dmtu) on 10 April, up by RMB 9.5/dmtu ($1/dmtu) from the previous month. The narrowing gap between seaborne and portside prices now just around RMB 1/dmtu suggests limited opportunities for smelters to source cheaper raw materials, a Wuxi-based analyst commented.

With elevated feedstock costs and persistently low tender prices from major stainless mills for March delivery, many smelters faced eroded margins last month, prompting them to slow their production increases. Mysteel's latest survey, covering 95% of domestic capacity, showed that ferro chrome output rose just 5.3% m-o-m to 605,500 t in March, down 10% y-o-y.

On the demand side, however, inquiries from stainless steelmakers remained solid. Mysteel's survey of 43 domestic stainless producers showed that during March, China's crude stainless steel output had climbed for the second consecutive month to a record 3.51 million tonnes (mnt). The results of the same survey indicated that output for April would remain largely steady, with production estimated to top 3.531 mnt which would be 0.55% up from March if the estimate proves correct.

If smelters continue to limit output, ferro chrome supply could tighten further in April, insiders warned. Many smelters are reaching breaking point and may struggle to absorb further losses if the stainless mills' bidding prices remain suppressed.

Reflecting a potential shift in sentiment, major stainless producers have begun to raise their ferro alloy procurement prices. Announcing its April bidding prices for high-carbon ferro chrome on 7 April, Taiyuan Iron and Steel Corporation (TISCO), a wholly owned subsidiary of China Baowu Steel Group based in North China's Shanxi province, lifted these by RMB 600/t ($82/t) m-o-m to RMB 7,395/t ($1,014/t). This move matched the increase announced earlier by Tsingshan Group, China's largest stainless steel producer, on 31 March. Mysteel Global noted that actual deals were made at this RMB 7,395/t level.

These upward adjustments followed a three-month period during which both TISCO and Tsingshan had kept their ferro chrome bid prices at historically low levels, aggravating the financial stress on smelters.

Still, concerns persist that stainless mills could face increased financial strain in the near term, as falling stainless steel prices continue to squeeze their margins. This in turn will limit their capacity to accept higher raw material costs, market insiders cautioned.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.