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BEIJING. — Neither Tsingshan Group nor Taiyuan Iron & Steel (Tisco) will be giving ferro-chrome tender prices in June, citing sufficient stocks amid plans to cut stainless steel output, Metal Bulletin has learned.
Major Chinese stainless steel mills traditionally announce their high-carbon ferro-chrome bid prices for June at this time, but the two largest buyers of ferro-chrome in China — Tisco and Tsingshan Group — have said they have enough ferro-chrome for their production needs, citing plans to cut stainless steel production in June following maintenance in May.
On Thursday June 1, Tisco told Chinese ferro-chrome producers that it would not be giving a tender price for June due to plans to cut production and because their ferro-chrome inventory is sufficient to cover stainless steel production to the end of the month. Tisco will only purchase from limited domestic suppliers on long contracts and at lower volumes, a trader familiar with the situation told Metal Bulletin.
In a normal month in 2017, Tisco typically buys 90 000 tonnes of ferro-chrome, according to market data. Of this, 80 000 tonnes is purchased from the Chinese domestic market, with the remaining 10,000 tonnes purchased from overseas.
Tsingshan Group has also said it would not release a tender price to the market in June, and will purchase lower volumes from long contract suppliers.
This is because half of Tsingshan Group’s stainless steel facility in Guangdong province will switch to producing carbon steel, while more than one third of stainless steel capacity in Fujian province will undergo maintenance, according to a Tsingshan Group official. It is the second consecutive month that Tsingshan Group has not released a ferro-chrome tender price.
In a normal month of 2017, Tingshan Group buys 140 000 tonnes of ferro-chrome, according to market data, around half of which is purchased from the domestic market and half from overseas. The official told Metal Bulletin that Tsingshan Group will require only 80 000 tonnes in June.
Falling stainless steel demand
“In late May and June, it has been very difficult for Chinese stainless steel mills to sell stainless steel products. As a result, high stainless steel stocks build up in mills,” a number of officials at stainless steel mills said. “Stainless steel traders are not willing to buy amid the downward price movement,” a stainless steel mill official added.
“The very weak stainless steel demand and falling prices put stainless steel prices under pressure, while also squeezing prices of ferro-chrome and nickel pig iron (NPI),” a Chinese ferro-chrome producer added.
Tsingshan Group and Tisco’s absences from the ferro-chrome market this month will put great pressure on Chinese domestic prices.
Metal Bulletin’s price quotation for Chinese domestic spot ferro-chrome, delivered duty-paid, fell to 6 100-6 400 yuan ($894-938) per tonne on Friday June 2, equal to 69-72 cents per lb, down from last week’s 6 600-6 900 yuan per tonne.
Tisco and Baosteel both significantly lowered high-carbon ferro-chrome tender prices (6 900-7 100 yuan per tonne) for May compared with the previous month, while Tsingshan Group did not announce a tender price in May.
“It would not be surprising if stainless steel mills announced tender prices for July below 6 000 yuan per tonne at the end of June or beginning of July,” a ferro-chrome trader said.
Switch to carbon steel production
Besides production cuts in May and June, some stainless steel mills have transferred part of their capacity to carbon steel to take advantage of good profits in the carbon steel market and because of weak demand for stainless steel, Metal Bulletin has learned.
Chinese Southwest Stainless Steel Co transferred one third of its monthly stainless steel capacity to carbon steel in late May, its official said. Half of Tsingshan Group’s Yangjiang facility in Guangdong province will transfer to carbon steel in June, its official said.
Meanwhile, Guangzhou Lianzhong Stainless Steel is considering to transfer part of stainless steel capacity to carbon steel, according to media report. Guangzhou Lianzhong Stainless Steel could not be contacted at the time of writing. — Metal Bulletin.
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