Oriental Express part 2: Chromium Ore is the last to fall

In 2022-2023 we discussed that despite price correction for chrome related products, chromium ore continues to show better price performance compared to its peers.

That was also true for Q1-Q3 2024, but in late September Cr ore prices took a steep dive (almost 10% in one week). One of the main reasons is the severe lack of transparency and liquidity for this product, even compared to Ferrochrome products.

While FeCr market has a numerous number of indexes for different regions (EU, USA, Asia and etc), Cr ore has only a few indexes, which all are based on prices for market in China. This situation is a result of China being the largest consumer of Cr Ore globally, around 90% of total export are designated for China, with South Africa accounting for close to 90% of global seaborne market. As a result, any news of future cargo transactions for South African material from China has an immediate impact on the Cr ore index.

While price drop in September was significant, Cr ore is still one of the best performing commodities since 2021, with China and Indonesia importing record levels of the material. Still, some of the pricing disadvantages that exist for ferrochrome/ferroalloys also exist for chromium ore.

The problem is that some of those transactions represent just a fraction of total tonnages imported into China. For example: when prices dropped rapidly at the end of September, the reported tonnage was around 30,000 from South Africa, which represents around 1.5% of total imports and 2.4% of total imports from South Africa (based on September 2024 data).

One can see that despite this number being exceptionally low, the price announcement immediately had a downward effect on the prices.

As with ferrochrome, a limited number of details are published, apart from tonnage and some partial chemical specifications, thus it is unknown why this cargo was sold significantly cheaper than before.

Despite that, as indicated in the table below, chromium ore shows better price performance than other chrome related products.

Data compares price difference between January 1st and October of 2024 versus same period in the three previous years.

With demand from China and Indonesia remains robust, due to direct usage of Cr ore, instead of FeCr for stainless-steel production, we expect price for chromium ore to remain less volatile than other similar products, while remaining above levels seen in 2021-2023.

Still as in the case with ferrochrome/ferroalloys, lack of verifiable price discovery and very limited information on the deals conducted, makes it very hard to estimate where the market for chromium ore moves in the short to mid-term.

The Cr ore market also requires a new mechanism for price discovery and improving transparency. While SoftMetal is primarily oriented towards ferrochrome/ferroalloys products, we believe that it can be used to provide benefits to ore markets as well.