The European ferrochrome benchmark price for the third quarter was settled at 98c/lb compared to 82c/lb in the second quarter. The main reason for the increase is that South Africa appears to be short on material available for the spot market, which has resulted in higher spot market transactions in recent months.
That being said, we are starting to see a pull back from China. The official bid price is around 71c/lb, CIF, China main ports, though from the second week of July we expect bid prices to decline by as much as 4c/lb.
Core Consultants expects that these prices could trend even higher in the fourth quarter on the back of restocking activity from China. It is expected that China will continue to purchase both ore and ferrochrome until the Chinese New Year in February. Consequently, we are finding that the major ferrochrome producers, who have stocks of ore and ferrochrome in South Africa are holding back supply as a negotiation tool. We believe that this strategy will bear fruits in the short term.