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

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.

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