Sentiment with respect to demand from the Chinese stainless steel markets appears glum owing to the high levels of stainless steel inventories. We consider the Wuxi Market (See Chart 5) as a proxy for Chinese stainless steel inventory levels. Stainless steel inventory has risen 24% since the beginning of the year and has increased 17% from the previous quarter. In April, China imported 42% more ferro-chrome reaching 199,678 tonnes, up 58,730 tonnes from March - 133,953 tonnes being procured from South Africa. Some of this consumption was driven by high chrome ore prices, which resulted in China substituting its consumption of ore in favour of alloy, but imports of ore and concentrates fell only 11,064 tonnes over this period. Our concern for the chrome ore market is that if demand in China does not improve, then they will have to cut production which will impact chrome ore demand.
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