China's ferrochrome market is seeing stable but weak pricing as major steel mills maintain flat tender prices. A growing supply surplus, driven by steady imports and domestic production, is capping potential price gains. Energy costs are playing a key role in production levels. In regions like Sichuan, lower electricity tariffs during the wet season are encouraging producers to restart idle capacity, further increasing the available supply of high carbon ferrochrome.
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The mention of Sichuan producers restarting capacity because of wet season electricity tariffs is the real story here. It shows how tied heavy industry is to seasonal hydro availability. Do we have data on how much the tariffs actually dropped to trigger these restarts?
It is the same pattern in other energy intensive sectors. If the power is cheap and available, they run the plants regardless of the demand side. The problem is that this just dumps more product into a weak market, killing the margins for everyone.
Interesting to see South Africa using preferential electricity tariffs to boost output. It is a blunt instrument for market support. If they just subsidize the power to increase volume in an already oversupplied market, they are just delaying a necessary industrial correction.
