Ferrochrome Price Analysis in January 2024

The price of high-carbon ferrochrome experienced a slight increase of ¥50/50 metric tons at the beginning of the month, followed by a stabilization in its trend. Despite stainless steel plants maintaining January procurement prices at a steady level, the scarcity of sources such as processed blocks led to a certain increase in bidding prices from carbon special steel plants, providing positive guidance to the market. In the latter part of the month, downstream buyers showed a cautious attitude towards chasing price hikes, focusing on essential stockpile needs. Consequently, slow follow-up in high-priced transactions was observed. Towards the end of the month, mainstream steel plants continued to maintain flat procurement prices for February, with limited impact on market stimulation. As downstream stockpiling gradually concluded, the market transitioned into a quieter phase with slower transaction performance. However, some chrome ore prices experienced a slight increase, continuing to provide support on the cost side. With no sales pressure before the holiday, mainstream iron prices remained in a “difficult to rise or fall” state.

1. Imported Ferrochrome Situation

Due to the continuous higher futures prices of imported high-carbon ferrochrome compared to spot prices, dealers and downstream users showed a weak willingness to purchase futures. Additionally, delays in resource shipment schedules were common. Consequently, the circulation of imported iron at ports decreased noticeably. This month, the spot prices of high-chromium ore in India and Zimbabwe followed the trend of domestic iron, with a slight increase of ¥50/50 metric tons. However, due to the sluggish casting market and early shutdowns downstream, hurt the ferrochrome market in South Africa, resulting in a slight decrease of ¥50/50 metric tons.

2. January National Ferrochrome

Production According to website statistics, the national production of high-carbon ferrochrome in January 2024 was 666,700 tons, an increase of 25,400 tons compared to December (641,300 tons), representing a month-on-month increase of 3.96% and a year-on-year increase of 30.27% (January 2023 production: 511,800 tons). Similarly, the national production of low-medium carbon ferrochrome in January 2024 was 58,200 tons, an increase of 3,800 tons compared to December (54,400 tons), representing a month-on-month increase of 6.99% and a year-on-year increase of 37.91% (January 2023 production: 42,200 tons).

3. Narrowing Increase in Low-medium Carbon Ferrochrome Prices

The price of low-medium carbon ferrochrome increased by ¥100/60 metric tons this month, showing a narrower increase compared to previous periods. At the beginning of the month, steel plants actively participated in tenders, and the continuous release of demand for low-medium carbon ferrochrome led to a further consolidation of market prices. As the iron price rose to a high level, dealers’ speculative willingness weakened. In mid-January, pre-holiday intensive procurement activities gradually came to an end, and the market returned to calmness. Inquiry volumes in the market significantly decreased, with downstream customers adopting a cautious wait-and-see attitude, observing the direction of future prices. However, the continued steady rise in raw material chromium ore prices squeezed factory profit margins, maintaining a strong willingness to support prices.

4. Chromium Ore Prices Fluctuating

This month, the spot prices of high-grade chromite ore led the market. Due to an increasing gap in the trade volume of high-grade chromite ore and the impact of the Red Sea incident, prices continued to rise both domestically and internationally. The spot price of Turkish chromite ore increased by a cumulative ¥2.5/tonnage. However, due to sufficient port sources for South African 40-42% chromite ore and differences in trade merchants’ shipment intentions, the transaction price fell by ¥0.5/tonnage. In the futures market, foreign sellers showed a more prominent willingness to support prices, particularly for high-quality chromite ore, resulting in a cumulative increase of $15/tonnage CIF in the mainstream chromite ore futures prices this month.

5. Steel Plant Procurement Prices

In January 2024, Qing Shan Group’s long-term procurement price for high-carbon ferrochrome was ¥8,495/50 metric tons (cash-inclusive factory price), unchanged from the previous month. The receiving price at Tianjin Port decreased by ¥150/50 metric tons, with a delivery deadline before February 10, 2024. Taiyuan Iron and Steel’s procurement price for high-carbon chromium iron in January 2024 was ¥8,295/50 metric tons (cash-inclusive factory price), unchanged from December, with constant procurement and a delivery deadline before February 10. Baosteel Desheng’s procurement price for high-carbon chromium iron in January 2024 was ¥8,495/50 metric tons (tax-inclusive factory price), unchanged from December.

6. Downstream Stainless Steel Market

This month, the stainless steel market exhibited a rising trend in the first half and a subsequent decline, with overall prices higher than in December. From the beginning to the middle and late January, stainless steel prices strengthened amidst fluctuations. Many steel plants maintained reduced production levels in January, and with plans for further production cuts in February, they played a role in driving the price trend. Before the holiday, downstream dealers concentrated on stockpiling, boosting the rise in stainless steel futures and spot prices. As the end of the month approached and the holiday atmosphere intensified, transaction activity declined, the market’s trading atmosphere weakened, and prices on the market continued to fall, albeit stabilizing due to support from production costs.

7. Next Month’s Forecast

In February, steel plants set the tone with flat pricing, placing certain constraints on iron price increases. With a decrease in on-site work rates before and after the Spring Festival, there is a weakening trend in demand for ferrochrome. However, with chromium ore prices remaining firm, some foreign sellers still have the intention to adjust prices upward. The cost support for chromium iron remains unshakable. It is predicted that the ferrochrome market will stabilize before the year-end, and post-holiday, as demand gradually returns, there is a small chance of a slight increase in high-chromium prices.


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