Glencore is pushing a $1.30 price for the third quarter, but buyers are balking and want a considerably lower price based on the market reality. Glencore’s reasoning, according to insiders, is that Chinese prices will increase in the third quarter and the Chinese prices will match or even exceed the discounted benchmark price. However, that seems to be wishful thinking considering that the Chinese price in equivalent US dollar terms is around 82-83¢, and the highest discounted benchmark prices are still over a dollar. Glencore is also expected to announce its third quarter benchmark before the Chinese stainless mills disclose their July buying prices which adds even more uncertainty.
“I don’t know how many times I heard that the Chinese ferrochrome producers are losing money and can’t supply the major domestic stainless mills, but that never happens,” one analyst pointed out. “I guess Glencore can’t say the South African rand has appreciated against the US dollar like they did in the second quarter to justify that increase and had to come up with a new explanation. However, in the end, its Glencore’s benchmark and they can do whatever they want with it.”