Chromium: August ferrochrome tender price remains weak

The Chinese ferrochrome tender price published by steel mills fell to an average US$0.70/lb Cr for the month of August, down 4.2% from July.

Roskill View

The tender price had dropped below US$0.70/lb Cr in January 2020 for the first time since May 2016, following which prices saw a strong uptick from demand in China that led to prices peaking at US$1.03/lb Cr in March 2018. A three-year consecutive surplus supply and weaker demand in 2019 caused tender prices to drop m-o-m to a low of US$0.65/lb Cr in April 2020.

With the European benchmark ferrochrome price being rolled over into Q3 2020 at US$1.14/lb Cr by South African ferrochrome joint venture Glencore-Merafe, the price difference has widened to its largest sustained premium over Chinese tender prices during the last decade.

Glencore-Merafe is on track to lose its leading position in the ferrochrome industry this year and ferrochrome production in South Africa will likely drop to levels last seen in the 1990s. This places a question on the importance of the benchmark price and the alloy surcharge calculation method for European stainless steel, which itself is facing headwinds and declining market share against Chinese and Indonesian growth.

Roskill published its Chromium: Outlook to 2030, 16th Edition report in June 2020, which includes a detailed analysis of supply, demand, prices, costs and forecasts. The report looks at the impacts of COVID-19 and how regional prices will perform over the next decade. For more information or to subscribe, click here.

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This article was written by Nils Backeberg. Please get in touch below if you wish to discuss further:

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