Merafe Resources, in a joint venture with Glencore’s South African chromium assets, announced US$1.01/lb Cr for the European benchmark ferrochrome price for the first quarter of 2020, decreasing by US$0.01 from the previous quarter.
In China, January 2020 ferrochrome tender prices dropped to below US$0.70/lb Cr, falling to below this mark for the first time since May 2016. In 2019, the average premium of the EU benchmark over Chinese ferrochrome tender prices (including VAT) was 39%, with the January 2020 premium now sitting close to 50%.
Ferrochrome prices have tracked a steady decline since the start of 2018, when Chinese tender prices were last above US$1.0/lb Cr. The decline for ferrochrome has been underpinned by both upstream and downstream market dynamics.
Excess chromium ore supply has resulted in subdued prices throughout 2019. On top of an approximately 2Mt surplus in 2018, lower cost platinum group metal by-product chromium from South Africa (UG2 chromium) has seen the largest increase in supply growth year-on-year. UG2 chromium has become the ore of choice for many Chinese ferrochrome plants and has underpinned low prices.
On the downstream stainless steel side, production growth has slowed compared to recent trends causing a weaker demand for ferrochrome. With large stainless steel inventories built up in 2019, the Chinese New Year up ahead and low January ferrochrome tender announcements, demand is unlikely to recover as the year gets started.
Roskill published the second update to its Chromium: Outlook to 2029, 15th Edition report in June 2019. The report outlines chromium supply, demand, trade and prices for both metallurgical and niche applications and provides forecasts for the next decade. For more information or to subscribe click here.