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China chrome ore import in 7 months up by 38.3% YoY


It is reported that China’s chrome ore imports climbed in January to June 2007 to 2.834 million tonnes valued at USD 620 million up by 38.3%YoY and 86.3%YoY respectively as compared with the same period of 2006. Import price averaged USD 219 per tonnes up by 34.7%.

South Africa and Turkey are the top exporters with 802,000 tonnes and 558,000 tonnes respectively up by 140% YoY and 88.4% YoY. The two countries provided 48% of China's total imports during the period. Imports from India dropped dramatically by 32.8% YoY to 521,000 tonnes owing to export quota and export tariff.

Increased prices and higher import volume can be attributed to the following reasons.

1. A severe undersupply emerges in China's domestic market as its crude stainless steel output registered 5.3 million tonnes in 2006 up by 68%YoY. The figure is expected to grow to some 7 million tonnes this year. However, the country's proven reserve of chrome ore merely recorded over 10 million tonnes and few of them can be exploited due to inconvenient transportation and high exploitation costs. In such a case imported chrome ore become the main sources to feed domestic demand. 80% of the consumption is derived from overseas resources and China thus becomes one of the major importers of Cr ore.

2. Exporters are negatively affected by policies. India was the largest exporter to China, but it began to impose an export tariff of INR 2000 per tonnes (USD 44 per tons) on chrome ore from this March 1st 2007 following the release of export quota. Average import price for Indian chrome ore thus gained by 68.6%YoY to USD 293.6 per tonnes in January to June 2007. China then turned to South Africa and Turkey for resources yet Turkey followed India to raise export price. Besides, South Africa adjusted policy in a bid to export high value added ferrochrome instead of raw materials such as chrome ore to China.

3. Ferrochrome price advances prop up chrome ore price. Stainless steel producer have agreed with South Africa on price hike of USD 0.08 per pound in Europe and USD 0.07 per pound in Japan for the second quarter. Export price for South African ferrochrome has risen to some USD 0.9 per pound hitting a new high. This also drives up chrome ore price.

Against such a backdrop, a united import strategy should be framed to raise China's pricing power in chrome imports. The country should also broaden import channels and accelerate reserves. Besides, is should speed up the research and development of substitutes and set up recovery system to promote reutilization.

China had imported 4.321 million tons of chrome ore in 2006 up by 42.9%YoY.