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Four measures announced by the NDRC are aimed at stimulating consumption: optimizing the purchase of automobile vehicles, expanding consumption of new energy vehicles, supporting rigid demand for houses and enhancing consumption of home appliances and electronic products.
All these are in favor of ferro-alloy products, which are used in the production of stainless steel, common carbon steel and special steel, among others.
“Ferro-chrome producers raised prices after the announcement of the stimulus,” one Chinese ferro-chrome trader said, “because they foresee rising stainless steel demand from the automobile and home appliances sectors.”
Fastmarkets’ weekly price assessment for ferro-chrome spot 6-8%, basis 50% Cr, ddp China was 8,700-8,900 yuan ($1,215-1,243) per tonne on Tuesday August 1, narrowing upward by 100 yuan per tonne from a week earlier.
Even international chrome ore miners and ferro-chrome suppliers increased their offers in the latest round of quotations to Chinese buyers, industry participants said.
Fastmarkets’ weekly chrome ore, South Africa UG2/MG concentrates index, cif China was $286 per tonne on Tuesday August 1, up by $1 per tonne (0.35%) from a week earlier.
“I’ve heard that the latest offer in the seaborne market is no less than $290 per tonne after the stimulus was announced,” a Chinese chrome ore buyer source said on Tuesday.
Meanwhile, Fastmarkets’ price assessment for ferro-chrome 50% Cr import, cif main Chinese ports was $0.97 per lb on the same day, up by $0.01 per lb (1.04%) week on week.
This snapped a downtrend that began since June 13 when the price was at $1.04 per lb.
Chrome ore is used to produce ferro-chrome, which is mostly used in the production of anti-corrosion and oxidation-resistant stainless steel.
Prices for silico-manganese, another bulk ferro-alloy product, also moved up in both the futures and spot markets.
“The futures contract of silico-manganese responds quickly to policies,” a manganese trader said. “It then props up the spot market.”
But there are still concerns about the effect of the measures announced by the NDRC.
“The alloys markets will strengthen, but how long can the robust market be sustained is unclear,” the manganese trader said.
“We are worried about whether the policies can be fully implemented or how much end demand for steel products can be added,” he added.
Despite improving market sentiment following the announcement of the stimulus, China’s ferro-silicon prices are not showing any signs of a recovery, having been declining since the beginning of this year, mainly due to weakened steel demand, a restart of furnaces in Ningxia Hui autonomous region and lower power costs in some production hubs.
“Most ferro-silicon producers are still cautious after the announcement because they are not sure these will be carried out in different cities,” a Chinese ferro-silicon trader said.
Another ferro-silicon trader told Fastmarkets that the current spot market was largely affected by news of crude steel production cuts, which caused downstream buyers to put in lower bids.
The same source added that even though the spot market was slightly boosted by rising ferro-silicon futures, the actual number of deals remains thin, and the market is still, by and large, oversupplied.
Imminent production cuts in crude steel output for the rest of 2023 are a bigger factor tempering the outlook of market participants in ferrous sectors, according to a second Singapore-based trader.
Market chatter regarding the production curbs emerged in mid-July after data showing China’s crude steel output in the first half of 2023 was published.
China produced 536 million tonnes of crude steel in the first six months of this year, up by 1.3% from a year earlier. fastmarkets
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- [Editor:kangmingfei]
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