(Reuters) - Global prices of ferrochrome, used to make stainless steel, have tumbled to their lowest levels this year due to weaker demand from stainless steel mills in top producer China, according to traders in Asia and Europe.
Low carbon ferrochrome was last quoted at $1.80 a lb, its lowest since Nov. and down 20 percent since late January. High carbon ferrochrome is at an eight-month low at 93 cents a lb and more than 30 percent lower since late January.
“The Chinese ports have about 10 weeks of chrome ore stocks and that coupled with reduced ferrochrome demand has sent the prices of ore and alloys crashing,” said Ravi Prakash, marketing and business development head for ferro alloys and minerals division of Tata Steel Ltd.
Stainless steel producers in China are cutting production as a supply overhang has pulled down prices, Prakash added.
China last year accounted for nearly 25 million tonnes or about 54 percent of global stainless steel production.
“Two of the largest stainless producers in China – Taiyuan Stainless and Tsingshan Group – say they have enough ferrochrome for their near-term production needs and are not issuing ferrochrome tender prices,” Citi analysts said in a recent note. “Both the main Chinese stainless producers have announced plans to cut output in June following ‘maintenance shutdowns’ in May.”
Some output cuts in South Africa, which produces nearly 60 percent of the world’s chrome ore, are unlikely to cut supplies significantly, leaving ferrochrome prices under pressures, traders said.
“Ferrochrome orders in the second quarter were much less than expected. With seasonal slowdown in Europe approaching, prices could take some more time to recover,” a London-based trader said. Global supply for ferrochrome this year is expected to reach about 12.4 million tonnes, compared with an estimated 11 million tonnes last year, Tata Steel’s Prakash said, adding global demand for the metal this year is seen at 12 million tonnes.
China’s stainless steel demand will fall in the third quarter as the property market and manufacturing sectors slow amid growing concerns about oversupply, an executive from the Stainless Steel Association said earlier this month.
Reporting by Eileen Soreng and Vijaykumar Vedala in Bengaluru; Editing by Pratima Desai and Elaine Hardcastle