Chinese high-carbon ferrochrome prices continued to soften through mid-July 2026 as oversupply weighed on the market. SMM assessed high-carbon FeCr at 8,000-8,150 RMB/t (50% Cr basis) in Inner Mongolia, 8,100-8,250 RMB/t in Sichuan and northwestern China, and 8,350-8,450 RMB/t in East China — down approximately 25 RMB/t week-on-week.
The steel mill tender expectation index stands at 8,219.59 RMB/t (50% Cr), with bearish expectations for mainstream mill tender prices next month. China imported 131,000 metric tons of high-carbon ferrochrome in May 2026, down 9.7% month-on-month and 15.6% year-on-year, with imports moving sideways at low levels as domestic oversupply reduces the need for seaborne material.
Production costs are diverging from selling prices. Chrome ore prices — the main raw material — rebounded in July after earlier declines. South African 40-42% chrome ore fines at Tianjin port were quoted at 53-54 RMB/mtu, up 0.5 RMB week-on-week. Zimbabwean 48-50% fines rose 1 RMB to 56-57 RMB/mtu, and Turkish 40-42% lump rose to 69.5-70.5 RMB/mtu.
Rising ore and freight costs have pushed FeCr production costs higher. Inner Mongolia production costs are estimated at 7,809-7,855 RMB/t (50% Cr), up 0.78% week-on-week. Sichuan costs are at 7,937-7,983 RMB/t, up 1.09%. The narrowing spread between production costs and selling prices is squeezing margins for Chinese smelters, but the market remains oversupplied.
The South African power story is the most significant structural development in the ferrochrome market in years. In late May 2026, the National Energy Regulator of South Africa (NERSA) approved a preferential electricity tariff of 0.62 ZAR/kWh (approximately US$0.03/kWh) for qualifying ferrochrome producers — Samancor Chrome and the Glencore-Merafe Chrome Venture. This represents more than a 50% reduction from the previous rate of 1.3582 ZAR/kWh.
Eskom's industrial tariffs had increased roughly tenfold since 2008, driving a wave of South African smelter closures and shifting value-add processing from South Africa to China. South Africa holds approximately 70% of global chrome ore reserves but has ceded ferrochrome processing share to China, which imports South African ore and smelts it domestically. The new tariff is designed to prevent further smelter closures and restore processing competitiveness. Separately, Eskom reported 365 consecutive days without load-shedding as of May 16, 2026 — the first full-year uninterrupted supply milestone since September 2018.
Bull case: Chinese stainless steel demand recovers in H2, absorbing oversupply and pushing FeCr back toward 8,500 RMB/t. South African tariff relief drives investment in domestic processing capacity. Bear case: Current oversupply persists through Q3 as stainless mills maintain cautious buying. Base case: FeCr trades 7,800-8,400 RMB/t through Q3, with the South Africa tariff relief gradually shifting the global supply balance over 2-3 years.
For procurement teams sourcing ferrochrome for stainless or specialty steel production: (1) Current oversupply creates a buyer-friendly spot market — push for 30-60 day payment terms and negotiate below the tender expectation index. (2) Monitor the South Africa tariff relief closely — if it enables domestic smelter restarts, it could shift the supply-demand balance over the medium term and reduce China's pricing power. (3) For chrome ore buyers, the rising ore cost trend (up 0.5-1 RMB/mtu weekly) suggests that FeCr cost floors are rising even as selling prices decline, creating a potential buying opportunity when the market eventually tightens. (4) Kazakh material at 9,500-9,600 RMB/t offers a premium alternative for mills needing consistent quality with stable delivery lead times.