Samancor Reduces Charge Chrome Benchmark for Fourth Quarter

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towards alternative pricing mechanisms, such as index-based systems offered by price reporting agencies, to replace the outdated EUBM.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.