Ferrochrome market have started 2021 with a rapid increase in prices for ferrochrome related products around the globe, by around 10% on average across the major products.

The current price surge is the result of robust demand from different sectors, including construction and infrastructure renewal fueled by economic stimulus packages from major economies. Combined with lower supply of some steelmaking raw materials, including ferrochrome, this is finally having a direct impact on ferrochrome and stainless-steel industries.

The prices increased significantly, and there are already voiced concerns about a possible price bubble. In fact, these products have just picked up from the multi-year lows. The level is still below their average for the last decade and almost 50% lower than historic maximum while lagging price hike rate of nickel, copper, and iron ore, not to mention some crypto currencies and some tech stocks. In general, all commodities prices are returning to normal sustainability levels, which would be beneficial for both producers and consumers. Thus, the prices have increased, but it is far away from being a price bubble at this level.

Of course, due to mixed fundamentals and uncertainties, any growth today looks fragile and the following current uncertainties will have their own effect on the ferrochrome market in short to mid-term future:

  • Further trade uncertainty between US, China and around the globe.
  • Significant increase in freight rates for goods between China, Europe, and the rest of the world, and new a threefold increase over the last half a year, due to shortage of containers.
  • An introduction of chromium export tax from South Africa, the intention to implement it has been voiced, but no details so far have been disclosed.
  • New carbon tax laws in EU, new China environment policy, new green initiatives announced by the US government and how it will affect procurement and production for the steel industry.
  • Concerns over remaining Covid economic impact.

What happens today with ferrochrome prices is another good illustration of a necessity for an exchange platform, where consumers, producer and traders would have much better measuring instrument for balancing current supply/demand and hedge its future, while additional participants from financial world would have an instrument for exposure into this particularly important industry. The key puzzle is how to structure such exchange for the multi-grade products like ferrochrome which have its price dependent on several elements like C, Si, Ph in addition to main element-Cr.

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