High-carbon Ferrochrome Output in August Dropped Sharply by Almost 100,000 mt, and might Fell Further in September due to Weak Demand
17:29 Sep 13, 2022 Source: SMM

SHANGHAI, Sep 13 (SMM) - According to SMM data, the output of high-carbon ferrochrome dropped 92,600 mt month-on-month to 468,000 mt in August, 2022, down 17,200 mt or 3.5% year-on-year. Specifically, the output in Inner Mongolia was 292,700 mt, a decline 14,800 mt or 4.8% from the previous month, and the output in Sichuan fell 53.6% on the month to 18,100 mt. Generally, the output of stainless steel fell further in August. Some steel mills reduced the output and even suspended the bidding for high-carbon ferrochrome. As a result, the demand for ferrochrome was further suppressed. In mid-August, due to the high temperature and low rainfall in Sichuan, the output of hydropower generation was insufficient amid the surging electricity consumption among residents. To follow the power rationing released by the Sichuan Power Grid, all ferrochrome producers in Sichuan were closed to secure the power consumption of resident. At the end of August, the power restriction was eased, but some ferrochrome producers were still shut down due to losses. In August, the ferrochrome prices continued to fall back, and the ferrochromium manufacturers cut the production in response to losses and only maintained the delivery of long-term orders. Overall, the supply of ferrochrome fell significantly.

The output of high-carbon ferrochrome in September is estimated to slide further to 428,400 mt. Meanwhile, mainstream steel mills offered lower tender prices for high-carbon ferrochrome, driving the retail prices of ferrochromium to fall accordingly. However, the port inventory of chrome ore still remained low with spot cargoes being held by a small number of traders. In addition, the high cost supported the spot prices of chrome ore to remain basically stable, intensifying the losses of ferrochrome producers. At the same time, large ferrochrome manufacturers in north China also suffered severe losses. Xinganglian announced its plan to curtail the output, and many other ferrochrome plants also decided to started overhauls and cut the production further. As the supply of ferrochrome continued to decline while the output of stainless steel in September has recovered, it is expected that the previous oversupply of ferrochrome will end.

Key Words:  Market  Market 
For editorial queries, please contact Daisy Tseng at daisy@smm.cn
For more information on how to access our research reports, please email service.en@smm.cn