OMG, ferrochrome is off the tracks

The horror and shock of its all, the ferrochrome price goes up and down and the Chinese don’t give a hoot (damn) about the Glencore benchmark price.

As soon as the new Chinese stainless buying price hit the market the cries of woe started to be heard from ore supplies and non-Chinese ferrochrome producers The ore suppliers immediately said to justify the new price, chrome ore prices will have to fall to below $130 per mt for UG2, and that wasn’t going to happen. However, the South Africans said that earlier this year and said they wouldn’t export to China at anywhere near those levels. Some did and other ore suppliers made up the difference from the loss of any South Africa material.

So, unless the mines start shutting down don’t count on a shortage of ore into China. Also, Chinese stainless demand is expected to fall through March and there won’t be as much chrome ore needed. Already some Chinese mills were predicting that domestic ferrosilicon prices would eventually fall to below rmb6,000 before they recover.

Then there was the argument that the Chinese price was not accurate since the mills don’t disclose how much they purchased at that level. Remind me again, does Glencore or any of the other ferrochrome smelters disclose how much they actually see at the benchmark price without a discount? Likewise how much tonnage are the indexes based on?

So is anyone served by the wide swings in the benchmark price? One analyst said the equivalent Chinese price in Europe would be 78¢ per lb but that would be for large tonnages and immediate payment.

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