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| Electricity Supply In South Africa Is Still Confusing, 60 - 70% Of Electric Furnaces Are Being Operated |
| = Eskom Held Again On 29th Meeting With Representatives Of South African Industries |
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While Eskom, national electric power corporation of South Africa, announced on the end of last week the entire stoppage of electricity supply, this crisis of electric power has been relieved by 60 - 70% of the power supply through an individual negotiation with Eskom by each consumer. However, even this measure for supply of electric power is a temporary treatment without its continuation and a forecast of the future situation on supply of electric power in South Africa is still not clear yet. A meeting between Eskom and industrial representatives was held on the 29th of January and the results of this conference are marked to see. The present aspect has caused to leave the live charcoal to make a fire of this confusion. A rumor, which Samancor Chrome declared on the 28th of January force majeure for supply of ferro-chrome, was spread over the markets in Europe and South Africa but it was known on the 29th that this declaration was actually not made. However, as a matter of fact, the operations of electric furnaces have fallen to a level of 60 - 70% and the parties concerned said that a possibility to notify a similar intention in the near future will be not deniable. Columbus Stainless of South Africa, which produces stainless steel at the Middleburg Works from ferro-chrome in form of hot metal supplied by Samancor Chrome, declared force majeure for their deliveries of stainless steel under the existing contracts because of a shortage of electric power ( This declaration of force majeure is supposed to have been misinformed to Europe as Samancor Chrome did. ) In consequence of that Eskom once said the entire stoppage of electricity supply but changed to supply electric power with 60 - 70% of the contracted volumes, a crisis to suspend operations of all electric furnaces has been avoided and the operations at plants to produce ferro-alloys have been reduced to a level of 60 - 70% against the designed capacities. However, this is a temporary measure and it will be inevitable to continue further a confusion of electricity supply. At all events, this problem on supply of electric power is unavoidable to put a substantial impact on the supply situation of ferro-chrome in the world for 2008. According to an estimation by a major producer, the world demand for ferro-chrome in 2008 is anticipated to come to 8.30 million tons and a focus is brought into the question of how extent is the quantity of ferro-chrome to be produced in 2008 able to catch up the demand for ferro-chrome as mentioned above. Apart from nickel, chrome is an essential raw material for production of stainless steel. A shortage of ferro-chrome is wondered to become a cause to decrease production of stainless steel. In view of the fact that chrome shares 5 - 6% of the cost to produce stainless steel, which is very low level compared with that of nickel, an anxiety for price of ferro-chrome is thin. Accordingly, when supply of ferro-chrome turns to be short, stainless steel mills will have a danger to rush to purchase ferro-chrome even at higher prices. This tendency is already appearing on the market. One of special steel companies in Japan held on this week a tender to purchase 2,000 tons of charge chrome and it is supposed that Indian product has been awarded at 128 - 129 US-Cents per lb. / Cr FOB as a similar level to the benchmark price. For a reference, it is anticipated that, even in South Africa, the matter to export chrome ore will be brought up. There is a strong view in the market that the Government of South Africa will take some measure in March of 2008 to regulate exports of chrome ore from South Africa, and the cut of electricity supply is causing to multiply further a necessity of this emergent treatment. South African producers of ferro-chrome submitted a joint petition to the Government, asking to enforce the regulations for exports of chrome ore. Eskom has planned to raise in 2008 their fee of electric power to be consumed for industrial purposes and initially intended to raise by 18.6% but, because of an objection to this raise from the industries concerned, the fee of electric power has been settled by a raise of 14.2%. However, owing to the stoppage of electricity supply, a severe shock to blow up this problem of raising power fee has occurred. |
| last modified : Tue 05 Feb, 2008 [12:00] |
