Q2 2020 for the ferrochrome industry has been a two-sided event. On one side the supply from major producers has been severely limited, due to shutdowns and lockdowns in South Africa, India and Zimbabwe, combined with reaction to major production cuts in the ferrochrome industry at the end of 2019, beginning of 2020 and improved stainless-steel sentiment in China with expectations of significant infrastructure spending. That led to a jump in prices for a majority of chromium related products, European Benchmark increased by 12%, Bidding Prices in China increased by 12%, UG2 ore increased by almost half from the end of Q1.

Still, in the final weeks of Q2, prices started softening in China and question arose what to expect in Q3.

This quarter is usually one of the slowest during the year for business in Europe and many other countries, thus with the current market conditions, economic uncertainty and concern over a second wave, prices for both stainless-steel and chromium related products could continue to decline. Normalization of mining and logistics operation in South Africa, India and Zimbabwe could put additional pressure on ferrochrome and chromium ore prices.

Despite that, reopening and recovery of economies and businesses in Europe, USA and the rest of the world should improve demand for chromium related products.

The latest analysis from Roskill falls directly in line with our previous estimations, that the large drop in ferrochrome production ex-China should contribute to rebalancing of the market. As soon as that happens the market should recover back to situation where producers can return to profitability and sustainable production.

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Exchange rate and selected prices. Lost in conversion 2
Standing at roundabout part 2: prolonged and winding roar to recovery for Cr industry in H2 2020.