Samancor Reduces Charge Chrome Benchmark for Fourth Quarter

Samancor has lowered its charge chrome reference price for 4Q 2024, sparking concerns over market disconnect and potential pricing reforms.
Samancor

Samchrome FZE, the distributor for South African ferrochrome producer Samancor, has announced a reduction in its reference price for charge chrome in Europe for the fourth quarter of 2024. The new price, set at $1.46/lb, marks a 4% decrease from the previous quarter’s benchmark of $1.52/lb.

Samchrome's reference price replaces the European Benchmark Ferrochrome Price (EUBM), a former industry standard for South African charge chrome with a minimum chrome content of 52%. The EUBM was discontinued in June 2024 due to pressure from European competition regulators and criticism from market participants, who believed it was disconnected from the spot prices of higher-grade ferrochrome.

The EUBM, once negotiated by South Africa's Merafe Resources and Glencore in partnership with a European stainless steelmaker, was abandoned in May 2024. Following the discontinuation, many buyers and sellers continued to use the final Glencore-Merafe price of $1.52/lb. Samancor initially adopted this price for its reference point in July.

Despite Samancor’s new reference price, multiple spot transactions have been reported below the $1.46/lb mark. Traders and end-users are expressing concerns that the new reference price, like the EUBM, may not reflect true market conditions. As a result, many market participants are turning towards alternative pricing mechanisms, such as index-based systems offered by price reporting agencies, to replace the outdated EUBM.

The Move Towards Pricing Reform

In both the European and North American markets, the search for a more accurate pricing system is ongoing. The limitations of the EUBM and concerns over the accuracy of the current reference price highlight the need for a more transparent and market-reflective approach. The future of charge chrome pricing may lie in the adoption of these newer, index-driven mechanisms.

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