Ferrochrome market Overview and SoftMetal advatanges

There have been a number of discussions the past and quite recently regarding Ferrochrome market and it’s sometimes puzzling Pricing Methodology. Briefly, we can group existing indexes into three category:

• China Bidding Price. Announced monthly by major Chinese stainless-steel producers – ferrochrome consumers. Deals are settled confidentially between ferrochrome producers and consumers and may be subject to discretionary discounts or incentives. Applied as an index for formula based long term contracts in China and some other Asian markets for High Carbon Ferrochrome and Charge Chrome in China.

• European Quarterly Benchmark – EQB. European Quarterly Benchmark is settled between the largest ferrochrome producer and one major stainless-steel producer on quarterly basis. Subject to discretionary discount, size and value of which is not disclosed. Applied as an index to Charge Chrome and HC FeCr formula contracts in Europe and some Asia

• Survey Indexes/Spot deals/Online Platform ranges and indexes: Prices for Ferrochrome and other ferroalloys are based on a telephone survey of the spot market. Being published periodically by industry publishing agencies on a regular, mostly dryly/weekly/biweekly…basis. Yet due to small and sometimes non-liquid size of the spot market, these indexes do not fully reflect the market situation, but these price ranges are often used as a basis for contractual formulas worldwide, except may be China. As the volumes this long term formula sold material is much bigger then the spot market on assessment of which the indexes are based this sometimes brings the market into a kind of ‘wag the dog situation’.

As one can see, the ferrochrome market has a variety of pricing methodologies, but most of them have certain weakness, and thus not always serve efficiently its main purpose - to keep a market balanced and support sustainable development for both producers and consumers.

From the graph below, it is visible that major indexes show almsot no correlation

Pricing graph

SoftMetal helps market participants to increase liquidity of the market via committed trade of their own individually defined grades in real-time with a full visibility of the supply and demand availability and offers for given selection. At the same time our clients can also monitor average/last deal price/quantity movement for their own selection of the market segment that they can choose based on the quality parameters, locations, CO2 footprint for the deals completed on SoftMetal. It is based on the confidential computing, a tamper proof verifiable technology in order to guarantee full data integrity and security.

We hope SoftMetal will not only be an important element of the market liquidity for its participants, but also will become a very useful tool for analytical and survey agencies that interested in discovery of the FeCr market and related products.

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