In the previous post we discussed how India remains one of the important players in ferrochrome seaborne market. On the other hand, China has been the largest importer of HC FeCr and barely exported much of this material, while once the prices for Refined FeCr reached a high level, China increased its exports of the LC/MC FeCr and became an important player at that market. Recent development is another example of lack of pricing transparency for chrome related products, which in turn doesn’t allow market participants to make neither short nor long-term business decisions.
In 2024 China started to export significant quantities of HC FeCr, in January-July period, China exported 78% of the volumes of 2021, 2022 and 2023 combined. While over 85% of all the export is going to Indonesia, this shows that stainless-steel producers in Indonesia, are now relying more on China domestic ferrochrome. Despite export duty, logistics, time of delivery and import duties, HC FeCr produced in China is being delivered to China affiliated stainless-steel producers.
Meanwhile India started to decrease volumes of HC FeCr that it exports. According to Ministry of Commerce and Industry of India total exports were around 48.14k tonnes of HC FeCr in June 2024, increase of 16.03% MoM, but at the same time decrease of 26.35% YoY. From January to June 2024, India’s total exports were around 275.75k tonnes HC FeCr, a decrease of 37.27% compared to the same period of last year (Jan-Jun 2023-439.61k tonnes). If annualized, exports of HC FeCr calculate at around 551.5k tonnes, the lowest level in almost a decade. This can be attributed to increased domestic demand, driven by growth in stainless-steel production as well as increase in per capita usage of stainless-steel, with this dynamic expected to continue.
A very important reason for the above-mentioned developments is price dynamics for both LC and HC ferrochrome. During Q2 2022 both products showed historically high price level, with around USD 6 per lb/cr and USD 4 per lb/cr respectively, fueled by economic recovery after 2020 downturn and robust demand from end users.
By the time price correction steadied in H2 2024, prices for Ch Cr dropped down to around USD 1.15 per lb/cr. This in turn started to drag down prices for low-quality HC FeCc, while prices for high-quality HC FeCr showing a bit more resistance due to being a niche product. The overall market for HC FeCr showed a faster reaction to changing supply/demand conditions.
Contrary to this, the market for refined ferrochrome took more time to start price correction due to less market competition and logistical bottlenecks from major supplying countries. That’s why we have seen sizable volumes of material from China in 2022-2023. from the prices started to lower further in 2024, the export volume dropped by around 3 times (January-July 2024 data), with expectations for material from China to pretty much disappear form the seaborne market by the year’s end.
India has started to increase export of refined FeCr almost a year after China, and so far, continues to grow its market share, due to more favorable logistics, financial and economic factors.
Still with the prices continue to edge down, there is a strong possibility that by next year, both China and India will have a significantly smaller share in the seaborne refined FeCr market. Unless demand from end users pick up significantly in Q4 2024-Q1 2025, thus returning prices to the level that allows for an arbitrage opportunity.
This delayed reaction to the increase/decrease in exports can be attributed partially to limited price discovery possibilities. Most price indexes for chrome related products are based on Spot market deals, but the market is small, and deals are not liquid or transparent enough due to lack of information about the competition landscape and results of negotiations. That’s very problematic since even during the production process the prices can change drastically enough to make the sale of material not economically feasible.
SoftMetal offers a smooth solution for this problem, as market participants can check real-time liquid trading market prices for any types of material they want to buy or sell. Those prices are calculated from averages of actual deals, indicating time of trade as well as tonnage. Market participants can create their own indexes, which can be adjusted by any participant to correspond to the type of material this participant is interested in, having an index for long-term buy or sell formula.