Liquidity restrictions in China are curbing ore and ferrochrome markets

摘要

Chinese ferrochrome demand remains steady, though stainless steel plants appear to have restocked in Q1 and thus can afford to pull away from the market today. The domestic prices for ferrochrome have decreased in the last month and imported material is being offered at higher levels than Chinese consumers would like to pay. Reportedly Indian material is offered to China at levels of $1.05-1.10/lb cif, with a few deals concluded at the lower end of the scale. Domestic ferrochrome prices are around RMB8,000-9,000/t (ex. factory, incl. tax), down by about RMB800/t from March highs. Furthermore, a large domestic stainless steel producer has reportedly set their May contract price at RMB8,850/t. The reason for the fall in ferrochrome prices is twofold. First it reflects reduced demand from stainless steel mills, and secondly it is due to ferrochrome producers having to liquidate some stock to maintain a higher reserve ratio.