Historically, under normal market conditions, China is
only a medium-sized buyer of processed South African foundry
material. This is because Chinese foundry sand buyers tend to
source foundry-grade material domestically, by screening and
washing metallurgical-grade product (coarse ore grades at 44%
or slightly higher) through Chinese wash plants.
These operations normally extract a grade that is both
usable by local foundries and more competitively priced than
material sourced from South Africa.
The performance of the foundry market in China is,
therefore, largely linked to domestic metallurgical grade
material. So a strong metallurgical grade market could add
support to the quiet foundry sector in China, albeit slowly,
The foundry wet bulk market has been stable since the
start of June, as has the foundry dried and bagged market,
although both markets did tick up slightly in the week to
Tuesday July 27. Fastmarkets’ price assessment for
chromite, foundry, 46% Cr2O3 min, wet bulk, fob South Africa,
rose to $200-225 per tonne on July 27, up by 2.41% from
$195-220 per tonne, where it had been steady for the previous
Also on July 27, the price for chromite, foundry, 46%
Cr2O3 min, dried and bagged, fob South Africa, was assessed at
$285-330 per tonne, a rise of 2.5% from $275-325 per tonne,
where it had been unchanged since the middle of
In contrast with the slow movement in foundry chromite
prices, a price rally for chrome ore 42-44% has been reported
in recent months. Prices for deals concluded in late June were
around $200 per tonne cif Tianjin port, versus $180 per tonne
in late May. The offer price was $210 per tonne cif Tianjin
port on July 19, and liquidity was heard at $230 per tonne on
July 28, sources reported.
Fastmarkets’ chrome ore South Africa UG2
concentrates index, basis 42%, cif China, rose throughout July.
Its sharpest increase occurred in the week to July 27 when it
rose by $8 per tonne to $174 per tonne, from $166 per tonne one
week earlier, marking a 10.83% increase from the start of
Energy-consumption restrictions in
China’s Inner Mongolia, in effect since late
December 2020, caused the high-carbon ferro-chrome market to
surge throughout the first quarter of this year.
The ferro-chrome spot price soared by 45% in the first
couple of months of 2021 to peak at 8,800-9,100 yuan
($1,357-1,403) per tonne on March 2.
Although the ferro-chrome spot price depreciated from
April to early June in response to looser restrictions in Inner
Mongolia and improved supply for smelters in central and
southern China, it lurched upward again after several main
production regions experienced power cuts in late May. By the
end of July, it had jumped to its highest level since September
Fastmarkets’ price assessment for
ferro-chrome, spot, 6-8% C, basis 50% Cr, ddp China, was
11,000-11,500 yuan per tonne on July 27, up by 49% from
7,400-7,700 yuan per tonne at the start of June.
Fast-rising ferro-chrome prices have encouraged
smelters to consider shifting to high-grade chrome ore, not
only to improve alloy output, but also to reduce power use amid
energy-consumption restrictions, market participants told
"Everyone is rushing to produce material thanks to the
amazing profits," a ferro-chrome producer said. "Chrome ore
with higher chrome content can help us to get more alloy output
per kilowatt-hour we consume."
Market participants have also suggested that chrome
ore 42-44% could remain in tight supply in the foreseeable
future amid robust downstream demand.
"Immediate availability of chrome ore 44% is limited
given the lasting strong demand, especially from the south," a
chrome ore trader said, "and we are holding the cargoes for now
until a further price rise, which we believe will come
Chinese buyers face a
Given the expected increased consumption of high-grade
metallurgical chrome ore and the rally in chrome ore prices,
foundry chromite market participants in China are expecting a
demand shift to processed foundry sand in South Africa. This is
because the material used in washing and screening is similar
to that used in ferro-chrome production.
With a bullish high-grade metallurgical chrome market,
material will mainly be shipped to ports such as Tianjin and
Qinzhou and less often to Lianyungang, a washing hub for
foundry material in China, a China-based supplier of foundry
sand said. "This means that we may expect a shortage of
screenable material," the supplier added.
China’s energy restrictions are another
factor. "Should they continue," a chrome ore producer said,
"ferro-chrome producers will definitely prefer high-grade
material with higher alloy output. This will result in a
declining supply of screenable material in China."
In addition, with South African miner
Chrometco’s mining and chrome wash operations on
care and maintenance, an expected supply reduction could also
lend some support to the market, participants said.
"Chrometco used to mainly supply the foundry sector.
Therefore, it is possible that foundry buyers could start to
look for material from the metallurgical sector once supply in
the foundry sector falls short," a second chrome ore trader
Given the remarkable price increase for 44% grade
material, the domestic foundry chromite market is bound to go
up, a second supplier of foundry sand in China told Fastmarkets
on July 27. The supplier reported hearing an offer price at 40
yuan per dry metric tonne unit (dmtu) compard with its previous
price of 33 yuan per dmtu.
"Should the price at 40 yuan per dmtu for 44% grade
material be a tradable level, we might get a price of $250 per
tonne cif China," the same supplier added. "The price
differential is narrowing when compared with the foundry sand
processed in South Africa. And it would be possible for Chinese
foundry buyers to source directly from South
Nevertheless, there are some that want to stand on the
market sidelines, given that China’s chromite
foundry market could still be under pressure from sluggish
demand during the slow summer season and amid ample
"It’s difficult to say how the market
will perform in the near term. But we have enough inventory for
the second half, and there are seaborne materials to come in
the following months," a foundry sand supplier in China told
Fastmarkets. "Hence, chances for a shortage of material could
There are 100,000 tonnes of screenable material at
Lianyungang port, indicating that supply could be adequate for
at least three or four months. With seaborne materials yet to
arrive, a supply shortage in the foundry sector is unlikely, a
Chinese chromite trader said.