China's ferro chrome output drops in April'26 on smelter maintenance

• Output falls 3.4% m-o-m in Apr26
  
  
• Production may recover in May
  
  

Mysteel Global: China's production of high-carbon ferro chrome (HC ferro chrome) declined in April from March, as planned power outages in parts of Inner Mongolia for grid maintenance prompted local smelters to halt production and conduct their own maintenance, Mysteel's most recent survey results show. Nonetheless, the outlook for this month points to a recovery.

China produced 863,400 tonnes of high-carbon ferro chrome in April, down 29,900 tonnes or 3.4% from March, according to Mysteel's survey covering 180 domestic smelters. Despite the on-month decline, the April figure remained high amid strong feed demand from stainless steel mills.

Over January-April, total domestic HC ferro chrome output reached 3.5 million tonnes, surging 38.9% from the same period a year earlier.

Inner Mongolia maintenance weighs on supply

Largely responsible for the output decline was the Inner Mongolia autonomous region in North China, the country's largest ferro chrome producing region. The region produced 682,600 tonnes of HC ferro chrome last month, down 5.1% on month, as prearranged power cuts for grid maintenance, together with major maintenance at large smelters, curtailed production.

High costs and lower prices squeeze margins

Ongoing geopolitical tensions last month ensured that overseas chrome ore prices remained firm, keeping overall production costs for ferro chrome elevated. On April 30, Mysteel assessed the portside price for 40-42% South African chrome concentrates at RMB 58.5/dmtu ($9/dmtu). Mysteel's latest assessments suggest that last month, the average daily cost for producing high-carbon ferro chrome using the semi-closed submerged arc furnace-electric furnace route stood at RMB 8,136/t($1198/t) in Inner Mongolia.

Meanwhile, spot ferro chrome prices edged lower, squeezing smelter margins and dampening their enthusiasm for production, with some smelters reducing operating rates in response. At the end of April, Mysteel's assessment showed that the price of 55% high-carbon ferro chrome in Inner Mongolia, the key reference price in the domestic ferro chrome market, had fallen to RMB 8,475/t($1248/t), 50Cr, exw including VAT, a drop of RMB 225/t($33/t) from a month earlier.

Outlook: Production to rebound

Domestic ferro chrome output is expected to climb in May, according to the survey results. The rainy season in southwestern China should fill hydroelectric dams in the region and see utilities firms trim their electricity tariffs, which in turn should prompt some smelters to resume production. Sichuan province, in particular, is expected to report a notable output increase.

At the same time, the current level of ferro chrome prices means smelters still have some profit margin. Late last month, Tai RMB Iron and Steel Co., one of the country's largest stainless steelmakers, raised its May long-term contract price for HC ferro chrome to RMB 8,295/t($1216/t) (50% Cr basis) including tax and delivery, cash payment, up RMB 100/t($15/t) from the previous month. Similarly, Tsingshan Group, China's largest stainless producer, set its May long-term contract procurement price for HC ferro chrome at RMB 8,495/t ($1251/t)(50% Cr basis) on the same basis, also up RMB 100/t($15/t) from April, Mysteel Global learned.

In this context, the number of low-priced cargoes has decreased in the market.

Stable demand to support the market

As stainless steel mills are seen maintaining full production schedules this month, they are expected to purchase feedstock ferro chrome steadily. This is likely to keep ferro chrome demand stable in the near term, providing support to both prices and smelter operating rates.

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