2024 in the ferroalloys industry has been very eventful and many changes anticipated before were materializing and altering the landscape of the global ferroalloys industry factors, thus raising the question of “What’s Next?”.
In the end of 2022 we discussed possibilities of market developments that could occur in 2023, and one of them was discontinuation of European Quarterly Benchmark (EQB).
That indeed happened in May of 2024, when Glencore/Merafe officially announced EQB discontinuation after being a leading market indicator for decades.
While this move was expected, no clear alternative has been introduced, so other companies decided to either continue EQB or create their own index:
- Samancor: continues quarterly announcement for an EQB.
- Noth American Steel (NAS) has created its own index, which is based on formulas incorporating 2 indexes:
- Index A – the mid-point of the Ferrochrome, high carbon, 6-8.5% C, basis 60-64.9% Cr, max 3% Si, cif Europe, $/lb Cr;
- Index B – the mid-point of the Ferrochrome 50% Cr import, cif main Chinese ports, $/lb Cr
- Nippon Steel: mill has now decided on the price from Samancor and Hanwa and possibly some of the Indian suppliers. This way the price would only be for less than 65% Cr FeCr and weighted towards South African suppliers.
- LME: suggested potential new cash-settled futures contracts for stainless steel scrap and ferrochrome, depending on market demand.
Despite those attempts, no clear indicator for the market has been established, and rather each index becomes more relevant for different parts of the world. We believe that this should give the ferroalloys market a push necessary to further improve its transparency, liquidity and more importantly price discovery.
Approach by SoftMetal or similar projects based on the factual prices (MetalsHub, IMP or maybe some others) should naturally be the optimal indicator, because they provide their users with prices from concluded deals, thus allowing participants to grasp market sentiment and direction. As soon as they provide enough liquidity.
As the year progressed prices for major ferroalloys continued their correction, and that process accelerated significantly by the end of the year. A few weeks ago, FeCr Bidding prices were lowered to the level last seen in September of 2022. That was followed by a steep drop for Chromium Ore, which is also at the levels last seen in March 2022.
As the result China, which was on pace to producer record 9 million tonnes of HC FeCr (around 52% of global output for HC FeCr), started rapid production suspension. The latest data indicates that 130,000 tonnes of monthly production is being idled (annual production of 1.56 million tonnes).
These cuts should help stabilize domestic supply/demand balance in China, and hopefully reverse negative price trend in mid-term.
Significant prices correction ex-China also resulted in disappearance of China manufactured refined ferrochrome from the seaborne market, since it became economically not feasible to sell material abroad.
Another interesting aspect of ferrochrome market is emergence of India as a stainless-steel powerhouse. With an installed capacity of 7.5 million tonnes, India could be one of the top producers around the globe. Yet, its capacity utilization is only at 60%, with a significant tonnage of stainless steel being imported from other countries.
Despite that with per capita usage of stainless-steel jumping by 11% from 2019 to 2024, and growing population, demand for stainless-steel could triple from 4 million tonnes to 12 million tonnes within the next decade. This in turn should create additional demand for a variety of chrome related products, especially for production of specialty and engineering steel. That in turn could make Indian market a premium one, compared to other countries in Asia.
Similarly to situation with material from China, once prices in world started to decrease, exports from India started to diminish, but it affected both LC/MC and HC ferrochrome, where India has been a significant player.
So, for 2025, there are lingering questions that ferrochrome market will have to face:
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- Will new tools, such as Softmetal, for price discovery become widely spread and become a reliable source of information for the market players?
- What will be the state of the stainless-steel industry? Based on the latest available data, it was on pace to break 60 million tonnes (with share of production in China reaching 62%)
- How fast can India increase its demand for stainless-steel and whether domestic ferrochrome industry capable of supporting this growth?
- Will major economies globally add additional stimulus packages to improve economic recovery?
- Will there be new tariffs on ferroalloys and what will be the impact on supply/demand?
- How CBAM can change the landscape of ferroalloys industry?
- Will Indonesia continue to grow its stainless-steel industry, and grow it direct usage of Chrome ore (while producing liquid ferrochrome domestically)
While current situation does remind market participants of December 2019, if we look at the price level for some indicators below, the picture is not that negative, despite difference in the cost of production:
We believe that in short to mid-term ferroalloys market will continue to experience volatility and a certain level of uncertainty, but recovery in stainless-steel demand and improved economic outlook will certainly help stabilizing supply/demand balance.