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Asian buyers seek lower low-carbon ferrochrome prices on China's cut in export tax

Tokyo — Asian buyers are seeking lower prices for low-carbon ferrochrome, on China's upcoming cut in the export tax to 15%, from the current 20%, effective January 1, 2017, market sources said Wednesday.

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One South Korean steelmaker has issued a buy tender for over 100 mt for January-March delivery earlier this month and continues to accept offers this week, market sources said.

The mill is seeking 10-50 mm lumps with minimum 60% chrome content, maximum 0.1% carbon, maximum 4% silicon, sources said.

Tender participants said the mill has indicated buying interest at $1.90-$1.95/lb CIF Busan or less than $1.95/lb delivered.

Before China's announcement of the export tariff cut on December 23, Chinese and Russian producers were offering at $2.05/lb CIF Japan, and a deal was reported done at this level in Japan.

The South Korean mill has confirmed issuing the tender but declined to elaborate on the details.

Near-term price outlook was positive, following a rise of 50% in European high-carbon ferrochrome prices for the first quarter, on the back of higher chrome ore prices, sources said.

The planned cut to China's export tax, however, has changed the sentiment around. A Japanese trader said he was seeking to buy at less than $2/lb from China in January.

Russian and Kazakhstan producers, who have their own chrome feedstock resources and lower production cost than Chinese producers who rely on imported feedstock, may lower their offers, said a Chinese trader.

But the downside is limited as chrome ore prices are likely to remain high, sources added.

Prices of 48% Turkish concentrates are holding at $450/mt CIF China for minimum 1,000-mt lots in the recent weeks, up from $400-$410/mt in early November and not affected by the pre-Lunar New Year trade slowdown.

Turkish mines are offering at $500/mt CIF currently, said one chrome ore trader.

S&P Global Platts does not assess low-carbon ferrochrome prices in Asia.

The Platts European spot price for 0.10% carbon material was last assessed at $2-$2.08/lb DDP Europe on December 22, unchanged from a week earlier.

The Platts US 0.10% spot price rose to $2.07-$2.10/lb in-warehouse on December 21, up from $2-$2.04/lb a week ago.

--Mayumi Watanabe, mayumi.watanabe@spglobal.com

--Edited by Irene Tang, irene.tang@spglobal.com