FeCr Supply Factors Overview November, 2018

1. ESKOM has been in denial about coal cliff

  • ESKOM is now running short on the coal stocks at the major powerplants. According to South African news sources and Ferroalloynet.com, some of the plants have around 10 days of stockpiles, while the minimum required is at least 20 days. ESKOM has warned that the possibility of nationwide power outages is increasing.
  • This problem continues to undermine governments attempts to attract more foreign investments in the country. Since such uncertainty most likely will push investors in the opposite direction.
  • This issue is growing on the weekly basis and continues to create major obstacle for the ferrochrome industry. Without stable supply of electricity, possible power shedding and outages, the industry most likely will continue to shrink at least for a short-term.
  • As the result, that might increase production and shipments of chromium ore, since its production is less electricity demanding.
  • To be a building block for the economy and the ferrochrome industry ESKOM will need to address the main problems and implement fundamental changes to solve them.

2. High-carbon Ferrochrome capacity release Chinese provinces in November 2018 (source: Ferroalloynet.com)

  • Guizhou November output is expected to be around 27,900 tonnes, which represents 34% of the total monthly capacity. The drop from October is around 2%.
  • Sichuan November output is expected to be around 33,000 tonnes, which represents 24% of the total monthly capacity. The drop from October is around 17%.
  • Hunan November output is expected to be around 13,000 tonnes, which represents 23% of the total monthly capacity. The drop from October is around 17%.
  • Northwest Region November output is expected to be around 21,200 tonnes, which represents 25% of the total monthly capacity. The increase from October is around 8%.
  • Shanxi November output is expected to be around 36,900 tonnes, which represents 40% of the total monthly capacity. The increase from October is around 2%.
  • There is no final output data for total Chinese ferrochrome production for November, but it is likely that the total output will decrease.
  • The obvious factors for the production slowdown are decrease in China tender prices for November, which put a lot of meltshops in a disadvantage due to high cost of production and ongoing environmental shutdowns.
  • Additionally, the above-mentioned provinces house a considerable amount of small ferrochrome meltshops. There is a chance that after environmental inspections some of them won’t return to the operations.

3. Despite decrease in ferrochrome production in South Africa and China it remains to be seen how the supply/demand balance will be affected. The question marks are the stainless-steel production further direction during slower winter months, environmental shutdowns in China and drop in stainless-steel prices on the background of various trade tensions concerns.

4. In these circumstances there are no good reasons for upward or downward movement for the ferrochrome market, unless one of the above factors starts to outweigh another.

Weekly Market Overview: October 22-26, 2018

Eskom wants to increase electricity prices by 15%

  • This is a continues issue that plagues South Africa, despite recent price hike, Eskom still wants to increase it, 15% annually for the next 3 years
  • Price hikes coupled with shortages of electricity and blackouts is one of the main reasons why big portion of South African ferrochrome capacity is either idled or operates at the low utilization rates
  • On the other hand, if NERSA (National Energy Regulator of South Africa) approves these price hikes, it most likely will force ferrochrome producers to hike their prices for both ore and FeCr

TISCO lowers HC FeCr bidding price for November 2018

  • TISCO was the first major stainless-steel mill to announce November prices, with the price being down 100 RMB/t (6750 RMB/t)
  • This price drop can be attributed to some domestic Chinese factors:

    1. The upcoming environmental measures most likely will affect both ferrochrome producers and consumers. It looks like TISCO believes that stainless steel mills will have to stop production on the larger scale, thus creating an oversupply of ferrochrome
    2. Secondly, TISCO itself is placing some of the production lines on repairs, thus decreasing its personal demand for ferrochrome
    3. Current supply is more than plenty, especially since TISCO mills are surrounded by ferrochrome producers

  • Most likely by the end of the next week other major stainless-steel mills will announce their bidding prices
  • After those prices are released, we will see of TISCO decided to seize the market opportunity by being the first to publish new price

Mouse or Elephant?

If you see a mouse under the inscription of an elephant, do not believe your eyes!

EU Benchmark vs CIF China South African FeCr price

The above graph represents one of the most puzzling aspects of the ferrochrome industry. The chart shows the gap between European Quarterly Benchmark and CIF China South African FeCr price. It is the same or similar material but the numbers represent the price indexes for two different markets. Needless to say that logistic cost difference is just a few cents and has nothing to do with the huge gap in numbers. While in the past the delta between the two markets was volatile, over the least two quarters it remains stable, on average a 50 cents difference.

Indeed, the existing pricing system does not reflect actual market reality. The same product might have a slightly different price, depending on geographical location and volumes, but such a difference illustrates how the existing system is misleading and that the global FeCr market requires something more reliable to measure actual supply and demand balance.

And the pendulum continues to swing

The trade tension between China and the USA is gearing up on the daily basis. Recently United States announced that it will implement a 10% duty on all the ferroalloys imported from China. Despite the fact that China is a minor player in the US market, the news immediately created negative sentiment within ferroalloys industry in China and worldwide. Currently analysts expect the August tenders to drop to the levels of June Tender Prices.

This once again proves, that like European Quarterly Benchmark, China Tender Prices does not have a value of a true market indicator but rather reflect the speculative sentiments at the moment of settlement. Both suffer from the same issues such as no transparency to the deals, are rarely based on the actual supply/demand and could move for 10% and more in one go with no big change in the background market conditions.

The same case applies here, because the news of 10% duty and other trade tensions news completely overshadowed that China started another stimulus program, thus possibly offsetting negative impact from Trade War.

Over last week China has done the following:

  • Cut its 7-day Treasury rate by 103bps

  • Launched quasi QE

  • Told banks to flood the system with liquidity

  • Sent the Yuan tumbling

  • Warned more easing is coming

  • Provided and additional tax cut of 65 billion RMB (9.6 billion USD) to companies with R&D expenditure

  • Expedited non-budgeted special bond sales to assist local government infrastructure financing

  • Eased restrictions on banks’ issuance of financial bonds for small firms

Combined with the recent data on chromium ore imports, stocks and ferrochrome production, these measures should be looked upon for pricing clarity.

Chromium ore stocks are now over 3 million tonnes, which represents about 2.5-3 months’ worth of production, the highest level seen from 2011. Ferrochrome production for H1 2018 is about 10% higher than H1 2017 and 25% higher than H1 2016. This shows that demand in China is still growing, and the new stimulus package should help settle the domestic demand at even higher level.

Additional upside comes from India, where due to severe rains and floods in Odisha state has caused delays in chromium ore mining and ferrochrome production. This coupled with all India truckers strike, even further complicated delivery of raw materials and finished goods from mines and plants. India is one of the largest suppliers of HC FeCr to China, in 2017 it accounted for 12% of total imports, while in 2018 it accounted for about 10%. The issues India is facing wont last forever, but it should help keep the market in China more balanced, until the impact of simulus will come into effect.

When the smoke is going down

Let’s look at the latest announcement of 700rmb/mt increase for July of ferrochrome bidding price by biggest stainless producer in China. This is widely regarded as the result of the environmental shutdowns in local ferrochrome industry combined with the demand fueled by the monetary easing measures. Restarted by financial authorities in April by decreasing of the banking reserve requirements and repeated in June. This comes in the background of recent announcement of the European Benchmark settlement for Q3 with just a cosmetic correction to previous quarter and at the level of about 10 usc/lb higher than many market participants might have anticipated.

This time European Benchmark has played a role of a leading indicator for the ferrochrome market. It was rather looking forward at the supply/demand picture than following bidding prices dynamics in China as it was the case for at least the last two years.

This is a change of the game and might be a sign that consolidated South African ferrochrome industry is taking more significant role in the market development. The news comes combined with the other factors in the country industry such as chrome ore export duty discussion, electricity cutback risk reappearance in the news and changes in China domestic production where the main recent topics were environmental production interruptions and closure of non-profitable ferrochrome producers.

There was a time in the early 2000’s when ferrochrome market in China depended on import and was following international trend. After 2008 it was moving in its own direction, not so much correlated with the international one. It was leading the market ex China for the past three years, and now the game is changing again. Hope to see in the second half of the year that it is going to be something new or is it a pendulum swing?

From dusk till dawn. Possible environmental cutbacks and global ferrochrome market in Q3 2018

Currently, the ferrochrome prices have started rising due to potential environmental cutbacks, which are currently being implemented in China. Nevertheless, the effect from the cutbacks will not last long.

As discussed, modest increase in China tender prices from May to June (200 RMB/t) was a positive sign. It was based on the actual fundamental factors, such as: improvement in stainless steel demand in China and an overall attempt by China’s ferrochrome industry to find a firm market ground for its further development.

On the other hand, there is a speculative factor of possible shutdowns or production cutbacks of ferrochrome producers in Inner Mongolia. Ferrochrome spot prices in China have increased by 400 RMB/t over the last weeks, according to Ferroalloynet.com. The market experts estimate that China tender prices for July will follow the rising trend.
However, if the prices go up rapidly this might counterweight the progress of stabilizing ferrochrome markets in China and worldwide.

In present market situation the optimal solution would be to continue moderate and calculated price approach in China, for both spot and tender prices.

EU Benchmark vs. China Tender

  • The benchmark values are published with one quarter lag, Q3 forecasted price corresponds to Q2 timeline
  • Orange square represents a base scenario for the EU Benchmark decrease in Q3
  • Green square represents Scenario 2 for EU Benchmark decrease in Q3

Q3 European Benchmark will probably continue its trend to follow China’s big mills bid prices and decrease for Q3 due to price dynamics in China from Q1 till now and a usual holiday slowdown in EU in Q3. While tender prices will be showing opposite tendency building a positive background for Q4 BM negotiation process.

Q3 2018 more of the same or change in trend?

As we expressed in our last column, the necessity for FeCr China Tender prices to break 7,000 RMB/t is apparent. Following the latest announcements by stainless-steel mill in China, it is safe to assume that this price is now a new support level.

Despite the modest increase of 200 RMB/t, we view it as a positive sign, taking into account continues growth in the spot market of both chromium ore and ferrochrome in China. These growths also come heading into Q3, which is widely considered the slowest time of the year for both ferrochrome and stainless-steel industries.

Will this growth continue? We believe so, especially based on the latest news of output reductions in the provinces of Fujian, Sichuan, Jiangsu and Hunan due to profitability issues. Additionally, there is a concern about possible future output disruptions and possible shutdowns in the major production hub of Inner Mongolia, after central China’s environmental inspection team arrives there.

These problems might push next China Tender Prices even further up, and though it is good news for the industry, be see increased volatility as a major problem. It would be preferable to continue modest price increases of few hundred RMB/t over the next quarter, rather than a thousand RMB/t or more jump, followed by 2-3 months slide.

China Tender Prices (Quarterly Averages) and EU Quarterly Benchmark

As you can see from the graph above, currently benchmark and China Tender Prices are continuing their trend, where benchmark continues to follow Tender Prices from China with a lag. Looking forward to Q3, benchmark might have to adjust to drops in China Tender Prices during Q2, and to summer period slowdown in stainless-steel production in EU.

A Few thoughts on the second half of 2018

With the first half of 2018 almost over, we would like to point out couple of observations which we believe are important for the market in the nearest future.

China Tender prices recently have been decreasing over the last three months. Although the current drop is much steadier than last year, now it seems that the market has found a footing floor, below which the supply might not be sustainable.

As the graph below shows that over the last two years, when the price drops below 7,000 RMB/t, the availability of the FeCr in China decreases.

Thus, a 7000 RMB level is rather a technical floor for tender prices in China in present circumstances. As the result, we expect the prices to start picking up again in the second half, though with a more calculated and moderate pace.

Another interesting development which has happened during the last couple of years but might not have been fully recognized by the market, is continuous consolidation of the ferrochrome industry in South Africa. The diagrams below illustrate that by 2018 only a few producers remain.

The main reasons behind the closures or production suspensions in RSA are as follows:

  • Generally difficult market conditions and unhealthy demand;
  • Lack of chromium ore deposits or high mining costs; and
  • Constant shortages and price increase for electricity

With potential acquisition of Hernic by Samancor, South African ferrochrome industry will be controlled by two major players: Glencore and Samancor. However, it is unlikely that Samancor will take over Quarterly Benchmark negations.

2018 Episode: A New Hope

While China is enjoying its annul festivities, South Africa has become a center of attention for the ferrochrome and metals industry. The interest is primarily due to the country’s political change, the election of the new president and rapid strengthening of the Rand.

Over the last couple of months, South African Rand (ZAR) has appreciated by around 12% to US Dollar (as shown in the graph below). This jump made Rand one of the fastest growing currencies among all emerging countries.

The strengthening of ZAR does have an unprecedent impact on the South African ferrochrome industry:

  • The strengthening of the Rand will result in increased cost of production for South African ferrochrome producers. This is turn will impact their relative competitive advantage versus Chinese producers, that was in place during price downturn and weak Rand.

  • Still, we believe that appreciation of the Rand will likely force the SA mining and ferrochrome industry to increase the sales price of their respective products, including ferrochrome, chromium ore and UG2.
  • Despite possible increase in prices, we see this as an additional step to balance the ferrochrome market.
graph

One of the main reasons for strengthening of the Rand was election of Cyril Ramaphosa as the new president of South Africa. His view on economy, specifically the mining sector showed that finally the government will address the issues plaguing the industry over the last decades. Furthermore, there is a strong believe that he will scrap completely the new Mining Chapter, thus attracting more investors in the country.

In conclusion we see both events as an important step in the history of the South African ferrochrome industry and expect it finally to get out of the recession.

"Back to the Future". FeCr Feb tender: more RMB means less Rands per unit

For the second consecutive month, stainless steel producers in China increased their ferrochrome tender prices by 600 RMB/mt, apparently the fundamentals support our expectations. Although this is an increase of 8%, we expect more growth towards the end of the quarter.

On top of the reasons discussed in the previous posts there is additional strong reason for further increase. This is a strong growth of South African Rand against USD, which has accelerated recently.

graph

As the above graphs shows that weakening of South African Rand over 2016-2017 helped chromium and ferrochrome producers to keep their revenue in Rands through the period of low prices (USc/lb). Over the last quarter, Rand strengthened by around 10% relative to dollar, thus forcing producers to increase the price for both chromium ore and ferrochrome.

Now prices of domestic ferrochrome in China are up 8% in RMB/mt. This will translate into a more or less same increase of usc/lb CIF China import price for South Africa’s Charge chrome. Yet, producers from RSA will get no increase in Rands per mt to cover their rising costs.

Start of 2018: "For a few dollars more"

With 2018 being only two weeks old, some positive news seems to come. That will hopefully be a positive sign for the 2018 in the Chrome industry.

There are indeed some positive indications:

  • High Carbon ferrochrome spot prices continue to rise in China and Japan. Despite holidays and slow trading, the prices are on the rise, as some traders and stainless-steel companies are preparing to store material for Chinese New Year, according to FerroalloysNet.

  • Spot prices for chromium ore in major Chinese ports continue to increase. In December alone, the prices increased by 10%, thus forcing ferrochrome producers to push their prices upwards.

Unichrome’s view on global low carbon FeCr market has not changed despite the correction of the China domestic prices in Q4, while current LC weekly dynamic it is down, which we believe does not reflect the underlying demand\supply picture. Thus, we expect this trend to reverse soon.

January tender prices in China also started an upward movement after two/three months of decrease due to increase in chromium ore, coal price and electrode cost increase.

Low Carbon prices in USA also seem to pick up — due to slowdown of imports from China affected by domestic price increase and export cuts by traditional suppliers due to the long time history of disadvantage in netbacks.

Improvement within China carbon steel industry

According to China’s Ministry of Industry and Technology, despite capacity cuts, China carbon steel industry profits improved by 180%, whilst operating revenues also jumped by 20%.

What is the main reason to that? — In our opinion, the carbon steel industry will be more focused on quality and profit improvements, and, at the same time, cutting overcapacity, including shutting down all loss-making enterprises and merging smaller ones. These measures show that China is quite ready to implement rather radical ways. After resolving the carbon steel industry problems, the Chinese government might potentially turn to solving exactly the same issues within stainless steel industry. Therefore, one can expect that such changes will improve demand for higher quality ferrochrome products.

China HC Ferrochrome update

As we discussed in our end of the year report, we expected China spot prices to grow at the beginning of the year. Judging by the latest news, our expectations were justified.

As reported by Metal Bulletin, the prices are continuing to increase due to increase in power prices (resulted from coal price increase) and continues growth in chromium ore prices. Both issues might lead to decrease in domestic production, thus China will have to rely on imported ferrochrome.

"Tomorrow never dies" — What is ahead for ferrochrome?

Some positive news are coming this week between Christmas and New Year. As we expected in UNICHROME, major stainless-steel producers in China have announced increase in their tender prices. It is up by 200 RMB/T. We think this is a move in right direction and we believe that Q1 2018 tender prices will continue to rise. We base our believe on the following:

  • The current environmental shutdown in China, so far has not affected stainless-steel production but has affected some ferroalloys producers.

  • Demand within China for the stainless-steel hasn’t shown any significant signs of weakening, and we believe it will continue to strengthen

  • Imports of chromium ore have been growing over the three months untill October, as well as prices. snd then decreased in November following prices drop. This behavior is a classic sign of the strong market. Cr ore prices are growing since then and this should lead to increase of import. All in all this is supporting the cost and price for ferrochrome.

  • Spot prices in China was rising recently thus also driving the import prices up.

We believe that recent drops in tender price for three months were already enough if not more than enough to reflect actual supply/demand balance, and the market will grow again. In our view a decrease in market volatility will help stabilize the industry, which has been suffering from extreme volatile price development creating disproportionately in supply/demand balance since at least 2016.

"Live and Let Die" — a Couple of Thoughts on New Benchmark Developments

Recently, there has been quite a bit of a dynamic development on supply / demand and, obviously, prices for some of Ferroalloys. Let’s take FeSi and some other products like electrodes as an example, which have recently exploded. Seems, ‘security of raw material supply’ has a chance to be the-phrase-of-the-year after a decade of the domination of so called ‘supply diversification’.

And what is happening with Cr price today? We refer to our previous view posted during Lisbon Conference. Over the last two years, EU Benchmark followed the dynamic of tender price in China. This price went down by 1,400 RMB/mt or approx 17% during the last three months (which is equivalent to 17usc/lb in absolute and in relative terms of approximately 23 usc/lb decrease of EU Benchmark). However, the picture has recently changed, and the strong demand is driving the price today on the background of limited supply, but no longer opposite. Will it impact a Q1 settlement? Hopefully, yes, and the last two years trend will break out. Let’s see. In any case, this is a good example to illustrate that the system of pricing of FrCr and other Cr-contained products is outdated.

Going further on FeCr pricing discussion, one could notice a very interesting development recently, when Patrick Ryan has announced the launch of the new index. Indeed, the most important and significant difference, which makes his solutions much more relevant, is the idea to measure, average, and hopefully, publish volumes, and not only the price. The market price has not much meaning without the volumes traded at this price. However, this obvious fact was never applied to most of ferroalloys and FeCr and Cr are good examples. Thats why we believe that above idea will be a good development as it will introduce the index of average price by volumes. Though, it has to deal with the same flaws as the current publications reporting FeCr price: spot market is respectively small and spot deals have a little market representation, as most volumes in US, EU and Japan are traded by formulas and not at fixed prices. Thus the key for such index is to include big enough volumes. This may need to consider and include prices on the volumes sold on long term formulas, otherwise this index will be based on a very small market share. Another issue is the transparency and, how reliable the sources are.

Recent developments of internet trading platforms for ferroalloys and numerous start-ups, designed to apply the blockchain technology in commodity trading in order to ensure facilitation of the transactions, can also help as such platforms will automatically be able to provide the data on the average pricing and volumes. This will automatically solve reliability issue, but again it will require such projects to be successfuly introduced in the industry to attract big enough number of the transactions to have representativeness.

We believe, that the market of Cr-contained products does require new index or a benchmark to reflect new realities, so we would like to suggest the following options:

  • First idea would perfectly feet into Patrick Ryan’s concept: Some (or as many as possible) of major ferrochrome industry participants shall report their weekly average sales/purchase prices, both spot and contractual based on formulas, by the type of ferrochrome product (high, medium and low) as well as volumes, which will be confidentially used for weighted average calculations. In this sense, the published weighted average prices would give more profound representative understanding of the actual market as it will include non-spot sales.

  • The second option is to acknowledge one independent, recognized and responsible trader, who will publish on a weekly (or monthly) basis its public ‘offerta’ for the sales price and binding purchase price bid at, say 5% discount to above of sales price. The purchase price also will specify the quality of the material, but not the origin. The tradable amount should be at least 500 tons per week. This will mean that somebody takes responsibility and will, consequently, lose the money if this price is wrong. This would give markets the feeling that the above price is reasonable and reflects actual market situation.

  • A possible solution can be a company or a hedge-fund handling some quantity of different grades representing respective grade world share of consumption by grades, with the total volume of 300-600k Mt. In this case, main producers and consumers would have a confident share, but not more than 5-10% each. This constitutes approximately 5-10% of the annual consumption of the world ex China. This fund shall quote warrants for certain share of the stock and buy it back with some reasonable discount. No doubt, this trading mechanism will establish more transparent indicators for the price. The justification for the price will be established, and this will also create efficient hedging mechanism on this market. Now we are in the process of forming a group of the parties interested in participation in the creation of such a mechanism. This solution will give a possibility for the Cr market to be more reliable, hedge-able and transparent. Moreover, this system may become a good solution for the other, non-LME metals and ferroalloys to find more appropriate pricing instrument.

The above-mentioned solutions or combination of those are just a stepping stone in developing the pricing mechanism for ferrochrome industry. It won’t be a swift transformation, but it is a change that the market needs. And we do appreciate the support from the stakeholders of this market we received so far.

“You Only Live Twice…” Could 2018 be same or more turbulent for Cr than 2017?

Once again, the market is hit by a downward direction right before the end of the year. Chinese tender prices have dropped around 16-17% over the last three months. Still that drop is less than what the market experienced in the first half of the year.

What is different? — The overall market conditions. Stainless steel industry is having another growth year, with the estimated production being 48 million tons, a new record. The demand for steel is also improving globally. With the improved conditions in the stainless-steel industry, ferrochrome production is also on the pace for the record global production.

So why are the prices going down?
One could call this drop as overcorrection due to end summer over-recovering due to the previous overcorrection in May following over-recovery in Q1-17/Q4-16 which, in turn, was a result of far more deep than justified drop of the tender price in beginning of the 2016. Thus, it is generally expected that the prices will pick up once again in March as demand in China will start to improve.

Background for the drop can be attributed to the fact that China is planning a major 3-month shutdown of the industrial production around 28 major cities. This leads to a strong believe that demand for stainless steel will decrease in Q1 2018. Also supply of chromium ore to China is sufficient enough to maintain necessary levels of production.

Overall, we believe that the industry does not need this Cr and FeCr volatility as it makes whole industry look unpredictable and speculative which in turn makes long term planning impossible and put at risk future development from both consumer and producer prospective. This is again a confirmation that Cr and FeCr markets require new approaches in pricing system.

Q4 2017/Q1 2018

This quarter once has again shown that the market is under the shadow of uncertainty of where the demand from China will go

The EU Benchmark for Q4 jumped 26% from Q3, following China tender prices strong behavior during Q3, while in China itself tender has changed the trend down both in October and November. The drop so far was 600 RMB (around 7 USC/lb, less than 35% of only September tender increase), and the December tenders will show if those drops were to balance the market and prices, or it is a start of the downward trend supported by the demand fundamentals.

On the other hand, quite strong performance of the industry form USA, EU and Japan economies showing best performance for more than 6 years, a steep drop in Q1 Benchmark is not anticipated.

The current chrome ore stocks being on the level of around 7 weeks, which are higher than the minimum seen year ago but still much lower than historical average. This again shows that demand for the ferrochrome in China is searching for direction.

Over the last couple of months new issues within the Ferrochrome industry started to pop up:

China tightening ecological norms and control:

  • The continuous tightening of the environmental controls in China so far has not affected FeCr industry on the large scale;
  • However, there is a strong possibility that in the near future China will have to close older ferrochrome smelters and steel factories, that would obviously have an effect on the demand for FeCr;
  • These controls also will have an implication on the use of scrap, which in turn will decrease the demand for FeCr.

Mining rules in RSA:

  • With the court date set in December, the mining industry is hoping for a negotiation that will satisfy both sides;
  • Yet, with a possibility of the new law being passed, that will further hurt South African industry, because future investors will be more cautions in investing in the country where they might not have enough power to make decisions.

LCFeCr anti-dumping probe in EU:

  • So far, the case has been put on hold, due to other anti-dumping issues between China and EU currently taking place;
  • With the increase in prices for refined FeCr in China, we believe that this situation will resolve itself, due to decrease in future imports into EU

Graphite electrode shortage and surcharge

No doubt, new development for the industry as stainless-steel mills is adding additional surcharge due to increase in cost of production.

  • The main issue is shortage of graphite electrodes and the fact that China supplies around 80% of total production;
  • On one hand, it shows that production is increasing and thus improvement in demand, but on the opposite side, increase in the prices for electrodes will become unsustainable for some of producers, thus resulting in production cuts;
  • This development once again proves that in order to have a stable industry it is vital to have a secure supply of raw materials, otherwise the disbalance and volatility will continue.

The above-mentioned issues show that now ferrochrome industry moved from simple supply/demand industry to an industry surrounded by political risks on the global scale.

UNICHROME presentation at the 3rd CIS Ferroalloys Conference in Tbilisi, Georgia

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