Alloys & Ores

Monthly Chrome Supply Chain Analysis

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Chrome, Ferrochrome & Stainless Monthly Review

In October’s Issue

Chrome stocks have climbed over 400,000 tonnes in a month, an indication that demand has not returned after China’s Golden Week. Chinese ferrochrome stocks at plants are relatively high, which means purchases can be delayed. Furthermore, there appears to be sufficient stainless-steel stocks for many producers to ride out purchases of ferrochrome until around March next year. As such, liquidity in the chrome ore market is low, and forecasts for both bid and spot prices for chrome ore and ferrochrome have a downward bias. So far, Tsingshan is the only mill that has released its bid prices for November, which it left unchanged at RMB6,396/tonne ($914/tonne), an unexpected positive surprise to market participants.

With respect to the ferrochrome market, power cuts and a general market slow down resulted in lower output from South Africa over the third quarter. Despite this, Chinese ferrochrome imports during this time remained relatively high, as China showed a strong preference for lower grade, cheaper ore over other varieties. This again corroborates our view that the market should experience a slowdown during the fourth quarter, characterized by delays in purchases until 1Q20.

Turning to stainless steel, the ISSF cut the global stainless-steel consumption output for 2019 to 2.4% from 4.8% in 2018. Figures for stainless steel production in 1H19, show an increase of only 1.9% from 1H18 to 26.12m tonnes. This lower growth follows declines in output from key producing nations including Japan, India and Taiwan which collectively reduced output to 3.9m tonnes, representing a y.o.y decline of 6.4%. Other regions including Europe reduced output by 5% y.o.y to 3.74m tonnes, the US to 1.35m tonnes (-6.4% y.o.y) and collectively Brazil, Russia, South Africa and Korea reduced their output by 3.4% y.o.y

Meanwhile, stocks at Wuxi and Foshan rose  in October which is ultimately expected to mute prices until the end of the year, which should impact prices for chrome and ferrochrome.

Producers have responded to the negative market sentiment by cutting output. Glencore indicated that full year ferrochrome production would be lower. Tharisa indicated that for the full year 2019, total chrome ore concentrate production declined 11% to 1.29m tonnes, while Yildrim indicated that it would consider stopping chrome production at Voskhod chrome mine in Kazakhstan. Last year Yildrim reduced production by 30%, but now they are considering temporarily halting all production until January next year. The company has already shut down its Tikhvin plant in Russia and now with the closure of Voskhod mine, deliveries to Tikhvin will be roughly 150,000 tonnes lower than usual on an annualised basis.

We have kept our benchmark forecast for 1Q20 unchanged at $1.05/lb.

 

The Core chrome ore monthly reports, has provided ten years of consistent trend analysis for the chrome, ferrochrome and stainless steel industries.

The analyst takes a macro, top down view of the industry and formulates their opinion based on the prevailing macroeconomic factors impacting the chrome supply chain. These factors include, but are not limited to the following:

  •  Chinese incentives to hoard stainless steel and chrome ore stocks
  •  Capacity expansions of ferrochrome smelters
  • Trade analysis including exports of South African chrome and ferrochrome

The report is extremely data-rich and tracks these developments as well as other economic trends, then, based on discussions with producers and traders regarding their expected volume output and exports, formulates a quarterly price forecast for the subsequent eight quarters based on the relative supply and demand imbalances.

  1. Chrome Ore Analysis
    1. Market Overview of Chrome Ore
    2. Trade of Chrome Ore
    3. Chrome Ore Price
  2. Ferrochrome
    1. Market Overview of Ferrochrome
    2. Trade of Ferrochrome
    3. Ferrochrome Prices
  3. Stainless Steel
    1. Market Overview of Stainless Steel

**Whilst we make every effort to keep the chapters and data consistent, this data may vary from month to month based on availability and relevance. Each issue is accompanied by a detailed excel data pack.

List of Charts

  1. Chrome ore inventory at Chinese ports
  2. Chinese stocks at ports by origin
  3. Spot vs. contract prices
  4. Ferrochrome stocks at Chinese plants
  5. Average LC/MC ferrochrome stocks at Chinese plants
  6. China chrome ore consumption by province
  7. Trade of Chinese chrome ore imports
  8. South African exporters of chrome ore
  9. Monthly Chinese chrome ore imports
  10. Chrome ore imports to China by country
  11. China HC-FeCr production
  12. China production rate by region
  13. China HC-FeCr output
  14. Number of operational furnaces by region in China
  15. China monthly LC/MC-ferrochrome output
  16. China monthly LC/MC output by region
  17. Chinese LC & HC chrome ore consumption
  18. Chinese ferrochrome imports from main suppliers
  19. Ukraine LC/FeCr imports by country
  20. Chinese stainless steel production
  21. Wuxi Market Inventory
  22. Foshan Market Inventory

List of Tables

  1. Outlook for supplier/ demand and price by quarter
  2. Chrome ore shipments due to arrive in China for the upcoming month
  3. Price of South African ore
  4. Price of Turkish ore
  5. Price of Zimbabwe ore
  6. Output of Kazakhstani ferrochrome
  7. Output of Russian ferrochrome
  8. Ukraine imports
  9. Chinese offer prices by stainless steel producer
  10. Chinese imported ferrochrome prices
  11. Average stainless steel surcharges
  12. Ferrochrome benchmark prices

**Whilst we make every effort to keep the chapters and data consistent, this data may vary from month to month based on availability and relevance. Each issue is accompanied by a detailed excel data pack.

Lara Smith

Lara has been an analyst for over ten years, starting her career as an equity analyst at Foord Asset Management and more recently as the lead analyst at Steinmetz Group, where she was responsible for sourcing, analyzing and evaluating potential mining acquisitions in Africa and the Baltic regions. In addition to the Steinmetz principal resource portfolio of diamonds and ferrous metals, they also held a smaller portfolio of base and minor metals including nickel, cobalt, copper and lithium. From 2009-2011, she independently authored three in-depth studies that formed the inception of Core Consultants Read More

 

Release Period: Monthly
Last issue release date: 30 June 2019
Next issue release date: 30 July 2019

 

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1 review for Monthly Chrome Supply Chain Analysis

  1. Andrew Jones

    Saves many thousands of research hours

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