Chrome chemical factories reopen but coronavirus outbreak could hit chromite demand
Published: Wednesday, 19 February 2020
Chrome factories in China's Hubei and Sichuan provinces have gradually returned to operation since February 10 but demand for chemical-grade chromite will be hit been hit by the coronavirus outbreak, market sources warned.
Most chemical factories have been closed for the Chinese New
Year break, which was intended to end by January 31. But the
outbreak of the novel coronavirus (2019-nCoV) in China forced
authorities in these two provinces to extend the holiday to
February 9 to prevent the spread of infection.
By February 10, many chemical works for the production of
chromium salts had restarted. But border closures, disrupted transport and
delayed downstream operations will continue to weigh on demand
for chemical-grade chromite.
"Our factory was not shut down during the holiday [so
employees did not leave the city] and therefore was able to
continue operation despite the outbreak," a first chromium
salts producer in China said.
"Meanwhile, we have enough chromite raw material for
production until the end of the first quarter but delayed
operation in the downstream sector, as well as the limited
logistics, indicates that we need to adjust our production," he
According to market participants, transport within the city can
continue as long as factories have a government-issued permit
to restart operations.
But in terms of cross-border transport, there remain risks of
being not allowed to get exit highways or circumvent
roadblocks, which has resulted in logistics operators capping
orders. This is caused inventories at chromium salt producers
to increase, according to a trader of chemical-grade chromite
in Tianjin City.
As well, at some factories only a single production line has
restarted to lower of risk of infection by the
"Being close to the port indicates that we have no problem in
transporting the raw material but the concern is about
logistics," a second chromium salt producer in China said.
"Even if we got the permit for cross-provincial transport to
deliver our products, it is difficult to find drivers and
trucks, which means we have to store the products and increase
Any improvement depends on whether the spread of the virus can
be contained, a third chromium salts producer told Fastmarkets,
adding that he would like to take a long position for as long
as the price of chemical-grade chromite is favorable.
The price of chromite, chemical, 46% Cr2O3 min, wet
bulk, fob South Africa was at $160-200 per tonne, according
to the latest Fastmarkets assessment on Tuesday February 18,
with confirmed deals done to China at the lower end.
For foundry factories in the northeastern part of China, the
picture was similar to the south. Traders of foundry grade
chromite told Fastmarkets of their concerns about the disrupted
logistics and a shortage of drivers to deliver their finished
products to downstream consumers.
"There is demand from downstream clients now. But we cannot
deliver the finished products. Beside a shortage of drivers and
trucks, there are some provinces, like Jiangsu, that will not
allow any vehicles with license plates of other provinces to
enter as a measure to block any possible infection," a foundry
grade chromite trader in Dalian City said
"What we can do at the moment is produce the finished products
with existing raw material so that, when the epidemic is under
control, we can guarantee the supply for our clients," a second
trader of foundry-grade material in Dalian told
Amid the uncertainty brought about by the coronavirus outbreak,
Fastmarkets’ February 13
assessment of chromite, foundry, 46% Cr2O3 min, wet bulk, fob
South Africa was an unchanged $190-220 per tonne.
On the same day, the price of chromite, foundry, 46% Cr2O3 min,
dried and bagged, fob South Africa was $260-380 per tonne,
flat for a third consecutive week.