Inner Mongolia, China's ferro-chrome production heartland, has imposed restrictions on its metallurgical sector in a move that has fueled the high-carbon ferro-chrome markets in China and Europe, and although this may ease off, the gains were unlikely to be lost while alloy ramp-ups continue, sources have told Fastmarkets.
The decision to restrict energy consumption in Inner Mongolia since December 2020
has led the market to tighten significantly throughout China.
And without any sign that the autonomous region will loosen its restrictions, production cuts can be expected to remain in place into the second quarter of the year, Fastmarkets has been told.
"We expect furnace [operations in Inner Mongolia] to remain controlled in the second quarter, and there might even be a further drop in April output," a trader source said. "It is hard to gauge what will happen in the second half of this year."
No official data was available but market participants estimated that 100,000-120,000 tonnes per month of ferro-chrome have been removed from Inner Mongolia's output, which had been around 320,000 tpm.
This significant fall in supply has boosted ferro-chrome prices.
Fastmarkets' price assessment for ferro-chrome spot 6-8% C, basis 50% Cr,...