Chinese buyers seek ferrochrome imports despite Lunar New Year

09 January 2017

Chinese steelmakers and ferrochrome plants are sending inquiries for spot ferrochrome and chrome ore imports, despite seasonal demand slowdown ahead of the Lunar New Year holidays in three weeks, market sources said Thursday.

Ferrochrome demand outlook for the period after the Lunar New Year is strongly positive, overseas suppliers said.

This week, some Chinese buyers were seeking to buy January shipments of high-carbon ferrochrome from India, said a producer source. One buyer was seeking a 5,000-mt lot for January loading.

A US-based chrome ore trader said market is quiet but he was receiving bids from potential Chinese buyers.

A Chinese buyer had indicated buying high-carbon ferrochrome (minimum 58% chrome) at $1.15/lb CIF China or less, which the producer rejected. “My last sale last week to China was at $1.24/lb CIF,” the producer said.

The chrome ore trader said bids for UG2 42% chromite were at $350/mt CIF China, against offers at $390/mt CIF China. Deals did not close, the sellers said.

Market sources pointed to January ferrochrome purchase prices of China’s leading stainless steelmakers, which were roughly at $1.13/lb.

Baowu Steel’s January purchase price was Yuan 10,300/mt ($1.13/lb), Tsingshan’s was Yuan 10,395/mt, and Taiyuan’s Yuan 10,100/mt, down Yuan 100-500/mt from December.

“The Chinese steel mills can buy from local producers. The local ferrochrome producers are able to support steel mill January prices. There is less demand for ferrochrome because the mills have gotten enough supplies,” said a Chinese trader.

January raw material consumption will fall due to the Lunar New Year holidays that typically last up to two weeks for some steel plants.

“The buyers are trying to put pressure on prices,” said the producer.

“But sellers can wait. There is no point in pushing things, as decisions will be put on hold [ahead of the Lunar New Year]. There is a consensus building that this stand-off will spill over into after the Chinese return,” said the ore trader.

Baowu Steel said last week that its January 304-grade stainless steel prices will be raised Yuan 1,200/mt to Yuan 17,000/mt for hot-rolled coils and Yuan 18,000/mt for cold-rolled coils.

Market sources agreed that mills usually can sustain with local ferrochrome supplies for near-term requirements, but some were reaching out to imports for February-March requirement, showing that China was still in deficit of ferrochrome given the strong demand for stainless steel.

Some Chinese stainless steel plants will have shorter holidays this year, than the usual two weeks, due to the strong demand for stainless steel.

Baowu Steel will be closed for a week, from January 26 to February 3.

“This is a good sign, steelmakers will require more material,” said the Indian producer source.

Japanese traders said they wanted to see if spot deal levels will reach $1.65/lb CIF, the first-quarter European price, in Asia. Japanese steelmakers have term ferrochrome purchase contracts, basis European quarterly prices.

Traders said $1.30/lb CIF is the highest they see for spot prices, despite the strong Chinese demand.

A Japanese trader said falling coal prices in China could put downward pressure on ferrochrome prices, but a second Indian producer said that was unlikely as coal production cuts in China would offset reduction in demand.

Source – Platts