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Fastmarkets looks at how the European ferro-chrome market landscape has shifted over the course of the year, and especially in recent months.
The European stainless steel market – the chief source of end-user demand for ferro-chrome on the continent – has been suffering for some time, as a result of falling prices, with particular pressure from lower priced imports coming from China, sources have said. In turn, this has put pressure on ferro-chrome markets in Europe.
Olof Gill, the European Commission spokesman for trade and agriculture, told Fastmarkets that the commission was following the situation in the sector closely and is “ready to act if/when necessary.”
“The latest development on this sector was that on 25 June, the European Commission published an implementing regulation extending the steel safeguard measure for two more years, until June 2026. The Commission also made some adjustments to the functioning of the measure, to adapt it to market conditions,” Gill said.
“The prolongation and adjustments are justified by significant import pressure on the Union market, linked to increasing global overcapacity and persisting risk of trade diversion. The Commission’s investigation concluded that EU industry would suffer serious injury if the safeguard measure was lifted after 30 June 2024.”
The adjustments entered into force on July 1 this year, Gill said, and the measure will expire on June 30, 2026, a total of eight years after its first imposition, which is the maximum application period of a safeguard measure allowed under World Trade Organisation rules.
Gill added that in the next mandate, the Commission will develop a steel and metals action plan, as indicated in the mission letter of the executive vice president-designate for prosperity and industrial strategy at the Commission, Stéphane Séjourné.
“As far as European stainless steel production goes, it has been relatively low for quite a while now. It fell from a recent high of around 7 million tonnes in 2021, to 6 million tonnes in 2022, 5.7 million tonnes in 2023, and this year is likely to see it remain around 5.7 million tonnes,” Fastmarkets senior analyst Robert Cartman said.
He added, however, that this demonstrated that most of the demand destruction may have already happened before this year, with production levels stabilizing.
“There is some nuance here, in that stainless steelmakers have been making relatively greater use of stainless steel scrap ahead of primary raw materials in recent years – a response to price signals and environmental regulation,” Cartman added. “The relative cheapness of scrap has diminished as a result. So, perhaps the demand destruction has been amplified slightly by this trend.”
Having come off the extreme peaks seen in 2022 in the immediate aftermath of the Russian invasion of Ukraine, European high ferro-chrome prices in particular still remained relatively robust throughout much of the past couple of years, despite the significant drop in European demand.
“In large part that is because Chinese growth in stainless steel production helped to offset the falls elsewhere, such as in Europe. And China, just like Europe, largely relies on imports for its chromium needs. And both China and Europe in turn rely on imports from South Africa,” Cartman said.
But the price support that kept, for example, the price of ferro-chrome high carbon 6-8.5% C, basis 65-70% Cr, max 1.5% Si, delivered Europe above $2 per lb Cr for such a prolonged period has faded in recent weeks, with sellers appearing to be in greater competition with one another, as falling end-user demand has pushed inventories up.
Around the end of 2023, growing numbers of market participants were reporting increasing levels of Indian supply coming into the high carbon market initially, but also the low carbon market.
Debate at the time centered on India’s ability to produce high and/or low carbon ferro-chrome of comparable quality – particularly with a minimum of 65% chrome content but also with impurity levels within accepted tolerances – to that coming from “traditional” origins.
But by December of that year, the eruption of hostilities in the Red Sea had created major challenges for shipments coming to Europe from India, and the question appeared to become moot, at least for a time.
Since then, however, the situation appears to have changed again, with higher grade production reportedly continuing to grow in India, and to come to Europe, especially in the low carbon ferro-chrome market.
“Looking at some of our trade data, India appears to have gone from a position of importing zero chromium ore from Albania in the years prior to 2023, to beginning imports later that year and, during the first half of 2024, importing around 10,000 tonnes,” Fastmarkets’ Cartman said.
One of the key stumbling blocks reported in India’s ability to produce higher grade material was its access higher grade chrome ore – and the implication of increased imports from Albania would be that this hurdle may now be gone, or at least have become smaller.
The country has also begun to import more ferro-silico-chrome from China, Cartman said – a further key component in producing higher grade alloy.
“With regards to India’s imports of ferro-silico-chrome from China, again these have increased. It was more or less zero in the years prior to 2023, then around 2,500 tonnes last year, and, during the first half of this year, around 5,000 tonnes,” Cartman said.
While Fastmarkets does not currently have exact figures for the total low carbon ferro-chrome production capacity in India, estimates suggest it could be up to 100,000 tonnes per year.
“It will be at least 20,000 tonnes based on export data, but is probably closer to 100,000 tonnes based on overall ferro-chrome production in the country and the typical percentage that is allocated to production of low carbon material,” Cartman said.
While sources on the sell side in India have continued to report that freight-related issues have stymied efforts to move lower grade high carbon ferro-chrome into Europe – for example, ferro-chrome high carbon 6-8.5% C, basis 60-64.9% Cr, max 3% Si – this has been less of an issue in higher value markets such as low carbon ferro-chrome, where margins are larger, it has been suggested.
“Freight is [not much] in terms of the margin,” a sell-side source in Europe said earlier in September. “The cost is much lower than market sales prices inclusive of freight.”
As contract negotiation season nears, market participants have said they are still looking at a variety of options in place of the former European quarterly benchmark.
Some buy side sources have flagged that they have seen continued confusion about what mechanism will be used going forward, with reports that there is still no single clear direction for market participants to take.
Among them, however, some have said they do expect to have a solution ready with September coming to an end.
Others have said they intend to use a combination of Fastmarkets’ prices, such as its ferro-chrome 50% Cr import, cif main Chinese ports and ferro-chrome high carbon 6-8.5% C, basis 60-64.9% Cr, max 3% Si, cif Europe price assessments.
And still others have said they intend to use one or more of these price assessments alongside another source such as monthly tender prices from China as part of their own formula.
For some, the discontinuation of the benchmark has had little impact.
“We didn’t use it before as a reference,” a ferro-chrome seller said earlier in September. “[In terms of timing] I think it’s going to be the same as last year – negotiations will probably start in November, but I think closing of contracts will be somewhere during the first quarter of next year.”
And there are other considerations to take into account, such as the ongoing challenges in the macroeconomic backdrop, with difficulties in end-user markets contributing to generally weaker demand for ferro-chrome in Europe.
Historically, negotiations would have been complete before Christmas, according to the ferro-chrome seller, but this is no longer the case.
“I see [buyers] collecting information and starting to talk in November and December, and then some partial quantities are [finalized] in January and February,” the seller said.
“It looks like the visibility is short, on both the buy and the sell side. [For example] the buyer doesn’t really have visibility [on their needs] for more than two months.”
Across various conversations since the discontinuation of the European benchmark, the importance of a reference to the Chinese market, as the world’s largest producer and consumer of the material, has been clear.
And as markets begin to look ahead to 2025, movements in China are expected to remain very much on the radar.
“Just as China has been important in driving [some] ferro-chrome prices higher and keeping them high, so the country needs to be looked at now that prices appear to be going into reverse,” Cartman said.
“There has been some talk that Chinese stainless steel output growth may finally slow, as has already happened with carbon steel. And the latest trade data for August may indicate that, with Chinese imports of chromium ore, [charge chrome], and ferro-nickel all at lows not seen since February-March 2024 and since January 2023 in the case of ferro-nickel,” Cartman added.
In terms of the outlook, it may be time for something of a normalization of both chrome ore and ferro-chrome prices, Cartman said.
“A slowdown in [Chinese] stainless steel production growth combined with an improving supply situation in South Africa are our expectations and would suggest that some of the air will be taken out of the market, though these markets have defied gravity for a while,” he said.