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EU ferrochrome hit a two-year high, still in an upward trend

  • Saturday, February 20, 2021
  • Source:ferro-alloys.com

  • Keywords:EU, ferrochrome
[Fellow]Since the beginning of this year, the price of high carbon ferrochrome in Europe has risen steadily and has reached the highest level since November 2018.

[Ferro-Alloys.com

  Since the beginning of this year, the price of high carbon ferrochrome in Europe has risen steadily and has reached the highest level since November 2018. In view of the rising demand and the shortage of low-cost materials in India, this upward trend will continue.

  On February 18, the price of high carbon ferrochrome in Europe rose to US $1.07-1.16 per pound, up 24% since it was estimated to be 85-94 cents per pound (duty paid delivery) at the beginning of the year. This marks the alloy's highest level since November 16, 2018, and for the next two years, prices have been under pressure from oversupply - a trend that is reversing with rising demand in Europe and tight supply, and is likely to support the prices of high carbon materials in 2021, at least in the second quarter.

  Increasing demand

  Covid-19 has been steadily increasing since mid-December, and optimism about the new crown pneumonia vaccine helped boost consumer sentiment and expectations, that is, consumer demand may rebound in the first half of 2021.

  Many stainless steel plants are almost back to full capacity before Christmas to meet the growing demand. With the recovery of stainless steel production, purchasing managers of many steel plants are currently recalling 100% of pre signed materials and in some cases seeking more materials.

  "Purchasing managers feel good about the next two quarters," said one trader He added that many people had negotiated new contracts with end users - a move that was not widely expected given the sluggish demand over the past 12 months.

  Due to the long-term production reduction, the increase in steel demand is also reflected in the prices of major steel products, such as hot rolled coil (HRC), which has soared from 664.50 euro / ton on January 4 to 729.75 euro / ton on February 18.

  In addition to the shrinking demand, many traders also found a sharp increase in spot inquiries. On the one hand, traders are looking for raw materials because they expect prices to rise. On the other hand, foundries and steel mills need more alloys. "There is demand everywhere now," says one trader Another manufacturer commented that they "can't believe they are so busy right now.".

  China's interest in European ferrochrome has increased in recent weeks as supply problems persist in Inner Mongolia. Many suppliers have sold large quantities of goods from Europe to China, but they point out that shortages of containers and ships continue to pose additional challenges and increase freight rates.

  Supply problems persist

  On the supply side, the supply of high carbon alloys in Europe is very low, with many major producers either sold out or not available on the spot market. One market participant said that they had always wanted to buy more than 1000 tons of gold, but few traders could sell more than 200 to 300 tons of gold at a time. That is to say, most of the spot transactions in Europe this year are higher grade materials with a minimum of 65% chromium, rather than low-grade Indian materials, whose chromium content is usually about 60%.

  Raw materials are in short supply in India. Indian manufacturers are focusing on domestic sales or sales to China. Due to the end of the Spring Festival holiday, China's import demand is expected to pick up. In January, Indian iron ore prices were often higher than those of European high-end materials, which made most dealers afraid to buy Indian ferrochrome. Usually, Indian materials occupy the low end of the price range, but with so few transactions, the recent rise is driven by high-end alloys. Most market participants expect this trend to continue into April, noting strong demand in China's stainless steel industry compared with Europe's slower economic recovery.

 

  • [Editor:Catherine Ren]

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