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|Supply And Demand Of Ferro-Chrome In Japan For Jan. - Mar. 2008 Quarter|
|= Under Largest Overstocks At Mills In Its History, Prices Of Ferro-Chrome Had Steeply Risen|
Let us trace the supply and demand of ferro-chrome in Japan for the first quarter (January - March) of 2008. The output of stainless steel products in Japan for January - March quarter of 2008 came to 857,100 tons, which had a considerable decrease of 10.7% compared with that (959,700 tons) for the same quarter of 2007. There is an optimism in the market that, in view of the fact which China has been expanding their production of stainless steel to a remarkable extent, the world production of stainless steel is still in the process to grow as a whole. However, the economy in developed countries has already become uneven and stainless steel companies in Japan and the USA have been decreasing their production of stainless steel. The mills in Europe once recovered the production in January - March quarter but turned again to reduce the production in April - June quarter. Accordingly, stainless steel mills in China and South Korea have entered from May into the structure to decrease their production of stainless steel. |
Under the circumstances, the quantities (on material base) of ferro-chrome consumed in Japan for January - March quarter of 2008 were <> high carbon ferro-chrome : 213,582 tons (compared with 227,499 tons for the same quarter of 2007) and <>low carbon ferro-chrome : 13,919 tons (compared to 12,750 tons for the same quarter of 2007). The consumption of high carbon ferro-chrome decreased by 6.1% but that of low carbon ferro-chrome increased by 9.2%. This increase in consumption of low carbon ferro-chrome was due to the expanded demand for this ferro-alloy from special steel mills.
Consequently, the quantities of ferro-chrome stocked at steel mills of Japan as of the 31st March of 2008 were <> high carbon ferro-chrome : 95,137 tons and <> low carbon ferro-chrome : 7,476 tons, both of which had a considerable increase compared with <> high carbon material : 68,983 tons and <> low carbon material : 6,602 tons stocked at mills as of the end March of 2007. Steel mills were unable to anticipate these increased stocks of ferro-chrome and the stock rate of high carbon ferro-chrome as of the 31st March of 2008 raised to 1.33 months.
In addition to the stocks of ferro-chrome as mentioned above, the cargoes of ferro-chrome, which were imported into Japan but not made yet customs-clearance, have existed in Japan and these stocks of imported cargoes are estimated to correspond to its stock rate of 2 months. Also, in view of a forecast which the production of stainless steel in Japan will be unable to turn to increase again for the time being, the excessive stocks of ferro-chrome have a large possibility to be kept throughout the year of 2008. According to the steel statistics released on the end July of 2008 by the Ministry of Economy, Trade and Industry, the quantities of ferro-chrome stocked at steel mills as of the 31st May of 2008 were <> high carbon ferro-chrome : 137,452 tons and <> low carbon ferro-chrome : 7,540 tons, which were the largest records since February of 2006 in its history. Therefore, the stocks of high carbon ferro-chrome at steel mills of Japan came to the stock rate of 2.16 months to be consumed by mills.
Under the situation as mentioned above, being stimulated by a crisis of electric power emerged from the end January of 2008 in South Africa, the market prices of ferro-chrome in the world have risen to a considerable extent. Namely, the price (benchmark price on CIF Japan base) of South African charge chrome has risen as follows ; <> for shipments in January - March quarter of 2008 : 129 US-Cents per lb. of Cr, <> for April - June quarter : 200 US-Cents and <> for July - September quarter : 213 US-Cents. No benchmark price is applied to low carbon ferro-chrome but the price of Russian low carbon ferro-chrome (with carbon 0.1% max.) settled with regular consumers in 2008 has also risen as follows ; <> for shipments in January - March quarter : 285 - 390 US-Cents per lb. of Cr CIF Japan, <> for April - June quarter : 465 - 480 US-Cents and <> for July - September quarter : 510 - 515 US-Cents, having also indicated a substantial rise.
Although nearly 50% of the world demand for ferro-chrome is being supplied by South Africa, a crisis of electric power has emerged in this country and Eskom, national electric power corporation of South Africa, announced the policy to freeze the supply of electric power for new plants or facilities to be expanded for the next 5 years. This decision has become a trigger to multiply an anxiety for short supply of ferro-chrome in the near future. As a matter of fact, the parties concerned have a view that the world supply of ferro-chrome is anticipated to be short until 2009.
Under the circumstances, steel mills of Japan are being questioned about the difficulties of how to judge " this phenomenon of the surplus "on supply of ferro-chrome. In spite of the excessive stocks of ferro-chrome in Japan, prices of ferro-chrome have steeply risen in the world but the prices to be consumed in Japan have lowered in comparison wit those in Europe and the USA. However, it is necessary for steel mills of Japan to conclude sooner or later new contracts with overseas producers on imports of ferro-chrome to be shipped in October - December quarter and afterwards. Also, China, where is becoming a rival country with Japan on production of stainless steel, has started to have an advantage to share more than 50% of ferro-chrome to be consumed by themselves by means of supplying with ferro-chrome produced in China. Therefore, domestic price of ferro-chrome in China has weakened from June and, in addition, India, where is a swing supplier of ferro-chrome but has been currently disappointed by the market movements in Europe, is now offering spot cargoes of high carbon ferro-chrome at discounted prices for Asian countries.
The domestic price of high carbon ferro-chrome (with Cr 50% min.) in China is 183 US-Cents per lb. of Cr at present, having fallen to a lower level than 200 US-Cents. Following this price in China, Indian products is being offered at similar prices. By taking into account of the quantities of chrome ore to be imported into China in 2008, this country is thought to produce 1,500,000 - 2,000,000 tons of ferro-chrome in 2008 and, in view of the fact that China has set up structure to produce 8.30 million tons per annum of crude stainless steel, a map to support this production of stainless steel from raw materials side is being made up. China imported 1,300,000 tons of ferro-chrome in 2007 and is anticipated to import 2,000,000 tons in 2008 but, owing to a change on the supply situation of ferro-chrome in China, this country is going to have an advantage of ferro-chrome produced in China.
BY contrast with the stabilized lower price of high carbon ferro-chrome in domestic market of China, South African producers have an intention to rise again price of charge chrome for shipments in October - December quarter and these two matters to struggle each other will become the subject to be discussed in the second half of 2008.
The quantities (on material base) of ferro-chrome produced, imported , consumed and stocked in Japan for January - March quarter of 2008 were as per the table shown below ;
|last modified : Thu 21 Aug, 2008 [10:55]|