23 January 2023 – Lower energy costs, rising raw material prices and significantly increased demand dominate the stainless steel market. Chrome ore and ferrochrome prices in particular have recently increased significantly. But the upward trend is currently also continuing for other raw materials.
Ferrochrome prices rise
After ferrochrome prices had dropped in August 2022, the European stainless steel producer Outokumpu (OTK) had shut down a ferrochrome blast furnace, among other things due to high energy costs. Actually, the restart of the blast furnace had been planned by the Finnish group only for the end of the first quarter of 2023. According to a recent press release, OTK now intends to restart the furnace as early as mid-February.
What is the current market trend for ferrochrome?
The approx. 50% drop in European energy costs and the almost 20% increase in ferrochrome prices in Asia, for example, clearly show that the ferrochrome manufacturer expects further stable and increasing prices and higher demand, which justify an earlier start-up of the blast furnace. If we now add chrome ores, which have increased in price by almost 33% since August 2022 and most recently remained only just below the peak level of May 2022, a trend towards rising ferrochrome benchmark prices is already emerging here.
Where is ferrochrome used?
Ferrochrome is a type of ferroalloy, which is an alloy of chrome and iron. It is primarily used in the production of stainless steel and other high-chromium alloys. The primary use of ferrochrome is as an alloying element in the production of stainless steel, which typically contains around 10-20% chromium. The chrome in ferrochrome acts as a corrosion inhibitor, giving stainless steel its characteristic resistance to rust and staining.
There are several grades of stainless steel that contain chrome, some of the most common include:
Grade 304: This is the most widely used grade of stainless steel. It contains 18% chromium and 8% nickel and is known for its excellent corrosion resistance and weldability.
Grade 316: This grade of stainless steel contains 16% chromium, 10% nickel, and 2% molybdenum, making it more resistant to corrosion than 304. It is commonly used in marine environments and chemical processing.
Grade 410: This grade of stainless steel contains 11.5% chromium and is known for its high strength and good corrosion resistance. It is commonly used in cutlery and valve components.
Grade 430: This grade of stainless steel contains 16-18% chromium and is known for its good corrosion resistance and formability. It is commonly used in decorative applications and in the automotive industry.
Grade 441: This grade of stainless steel contains 18% chromium and has good high-temperature resistance. It is commonly used in automotive exhaust systems.
Ferrochrome is also used in the production of other alloys like high-chromium steels, nickel-chromium alloys, and chrome-cobalt alloys. It’s used in the production of special steels for the aerospace and defense industries, and in the production of heat-resistance alloys for the chemical, petrochemical, and power-generation industries. In addition to that, ferrochrome is used in the production of refractory materials, pigments, and catalysts.
Outlook stainless steel alloy surcharges February 2023
Raw material prices have continued their upward trend in recent weeks. Nickel has increased by around 18.5% since December 2022. Steel scrap has increased in price by around 15.5% since December. Molybdenum prices have even increased by over 60%.
As a result, the expected European alloy surcharges for grade 304 stainless steel (1.4301) are on average approaching their mid-2022 level again. The same can be expected here for grade 316L (1.4404), which is even anticipated to be considerably higher than the average 2022 surcharges.
- Steel prices get tailwind from empty stocks
- European stainless steel demand continues to pick up
- EU Parliament votes for scrap export ban
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