What impact will China’s ferrochrome be affected by the epidemic?
First, affected by environmental protection and epidemic situation, production of ferrochrome enterprises is limited
The four provinces of Hebei, Jiangsu, Inner Mongolia and Xinjiang under the supervision of environmental protection all have high carbon ferrochrome smelters, with a total production capacity of about 50.82% in the country. According to the research , as of 13th Inner Mongolia and Xinjiang are affected by environmental protection. Among them, Inner Mongolia fengzhen, Huade, Bayannur area have entered the inspection, but because some enterprises entered the routine maintenance stage in advance as planned, so the impact of environmental protection has been weakened.
The high-carbon ferrochrome smelters in Jiangsu and Hebei provinces have not yet been visited by environmental protection inspection teams, and their production is mainly affected by the epidemic. Since March, the epidemic prevention and control efforts have been intensified, with road closures, nucleic acid and “yellow code” measures taken in many places. As a result, it has been difficult for factories to import and export raw materials and products.
As of Monday, 16 companies had stopped production due to environmental protection and the epidemic, affecting daily output of about 4,440 tons. The production of high carbon ferrochrome in
April is expected to be about 580,000 tons, down 2.2%.
Second, stainless steel production is limited by the epidemic
In April, steel mills in Jiangsu, Zhejiang, Fujian and other places were affected by the epidemic and maintenance, and the output of 300 series stainless steel decreased slightly. According to the research, 33 domestic stainless steel plants in April 2022 crude steel production of 2.911,500 tons, is expected to be basically flat month on month. The epidemic has limited impact on stainless steel production, and ferrochrome demand has not decreased significantly. However, the epidemic led to freight increases and logistics and transportation blocked, steel production and delivery are not smooth, there may be a risk of raw material supply failure, subsequent stainless steel production and marketing smooth, depends on the development of the epidemic situation.
Three, the high cost of ferrochrome enterprise production power shortage
Even without environmental supervision and the impact of the epidemic, most of the ferrochrome enterprises are limited to high raw materials, itself is also facing pressure to reduce production. The first quarter by the cost end of the ore price and coke prices continue to push up, high carbon ferrochrome smelting costs continue to rise. The spot cash smelting cost of high carbon ferrochrome in April has increased by 263-518 yuan /50 base ton. As of 13th, the average cost of spot smelting of high carbon ferrochrome in north China is 9,484 yuan /50 base ton, and in south China it is 9,935 yuan /50 base ton. Downstream demand did not improve, the market price rises slowly. At present, the production cost of the factory is seriously inverted, and the production enthusiasm of the factory is low. Most factories in south China only deliver the orders of the long association, and some steel mills say that the long association also has some difficulties in receiving the goods.
- Environmental protection leads to a small reduction in ferrochrome production, with limited short-term impact Environmental protection supervision and epidemic situation led to a small drop in the supply of high carbon ferrochrome, and some high carbon ferrochrome enterprises reduce production, more in order to cope with the pressure from the material cost increased significantly. Under the high cost, the ferro chromium price support force is sufficient, ferro chromium market is expected to run in the short term.
- Ferrochrome demand is well supported in the short term, and the follow-up depends on when the epidemic will ease Ferrochrome enterprises accept supervision of environmental protection at the same time, the downstream stainless steel companies are also restricted to the epidemic prevention and control, transportation and so on raw materials and finished products is not smooth, ferrochrome production fell slightly in the short term, due to temporarily can’t will influence to the downstream, does not drive the ferrochrome prices obviously, after being downstream epidemic mitigation, if ferrochrome production remains low, At this time the ferrochrome market will be driven by demand, there is a certain rise.