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| Prices Of Ferro-Chrome Are Being Blown With Cool Wind And Weaken For Next Quarter |
| = Low Carbon Fe-Cr Will Propose To Reduce Its Price In This - Next Weeks |
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A recovery on production of stainless steel is delaying and anticipated to come up in summer of 2009. Since the world production of stainless steel has continued to decrease for a longer period than that as forecasted, even a bullish attitude for prices of ferro-chrome is going to be blown with a cool wind. This aspect has been sensitively felt by market price of low carbon ferro-chrome and the suppliers concerned will turn to reduce their price of low carbon ferro-chrome for shipments in October - December quarter of 2008. For a reference, the negotiations with stainless steel mills in Europe on price of South African charge chrome for shipments in October - December quarter are thought to be taken place from late part of September and it is marked to see an issue of the above negotiations. Many of the shippers concerned are supposed to propose regular consumers in Japan their price of low carbon ferro-chrome for October - December quarter during this week to next week and this proposal will reduce their price. The prices of low carbon ferro-chrome with carbon 0.1% max. settled with Japanese consumers for shipments in July - September quarter are in the range of US$5.10 - 5.15 per lb. of Cr CIF but a proposal for the next quarter of October - December has a big probability to be lower prices than US$4.50 - 4.60 per lb. of Cr CIF Japan. The market price of low carbon ferro-chrome has turned to rise from October - December quarter of 2007 and, owing to the fact that an accident occurred in February of 2008 at the Ferrometals plant of Samancor Chrome in South Africa, producing 65,000 - 70,000 tons per annum of IC-3 grade ferro-chrome (medium carbon ferro-chrome), the market price of low carbon ferro-chrome has been multiplied to rise to a considerable extent. However, the current situation of price for low carbon ferro-chrome seems to be inevitable to be adjusted for a fall. After it took 6 months to restore, the Ferrometals plant resumed to produce IC-3 ferro-chrome and the supply of this ferro-chrome will revive from October - December quarter. Reflecting an accident occurred at the Ferrometals plant of Samancor Chrome, the price of low carbon ferro-chrome in Europe had risen to a level of US$3.75 - 3.90 per lb. of Cr for carbon 0.1% max. in March - April of 2008 and, after that, continued to rise further. Reacting to this sharp rise of the price in Europe, the prices of low carbon ferro-chrome contracted with steel companies of Japan had risen to <> April - June quarter 2008 : US$4.65 - 4.80 per lb. of Cr CIF and <> July - September quarter : US$5.10 - 5.15 CIF respectively. A basic tone at present to weaken price of low carbon ferro-chrome has been influenced by the fact, which China resumed to export low carbon ferro-chrome from July - September quarter of 2008 and commenced to sell this ferro-alloy at discounted prices. According to the customs-statistics released in China, this country exported 52,497 tons of low carbon ferro-chrome in January - July of 2008, which had a considerable increase of 306% compared with that in the same period of 2007. Chinese producers have adopted another process for refining in production of low carbon ferro-chrome and the specifications of low carbon ferro-chrome produced in China have contained 60% of Cr (chrome) and 0.03 - 0.04% of P (phosphorus). Namely, Chinese product is lower content of Cr and higher content of P. In spite of these disadvantages, Chinese producers are expanding their sales of low carbon ferro-chrome at discounted prices. The world prices of ferro-chrome in 2008 have been twisted by China, where has grown to the enormous market of ferro-chrome. First of all, in expectation of a substantial increase on imports of high carbon ferro-chrome (charge chrome) into China, South African producers had taken an optimism of the exports for China at the beginning of 2008 but this anticipation seems to have been disappointed. It was initially expected that China is thought to import 2,000,000 tons per annum of high carbon ferro-chrome (charger chrome) in 2008, but China is contrarily estimated to import 1,200,000 tons per annum of high carbon material in 2008, remaining on a similar scale to that in 2007. For a reference, according to the customs-statistics released in China, this country imported 756,000 tons of high carbon ferro-chrome (including charge chrome) in the first 7 months (January - July) of 2008, which had a slight increase of 1.5% compared to that (745,000 tons) in the same period of 2007. South African producers of ferro-chrome expressed their view that the world supply of high carbon ferro-chrome (charge chrome) in 2008 will have a shortage of 500,000 - 600,000 tons per annum. However, owing to the facts that South Africans unexpectedly exported charge chrome for China only with less than 800,000 tons in the first 7 months of 2008 and stainless steel mills have been reducing their production of stainless steel on a worldwide scale from May of 2008, an expectation for the short supply of high carbon ferro-chrome is disappearing from the market, as far as this subject is focused on the aspect in the second half (July - December) of 2008. In view of the fact that the world output of stainless steel in 2007 came to 28.584 million tons, the production in 2008 was expected to increase by 5 - 8% from that in 2007 but the world output of stainless steel turned to tone down from May of 2008 and an expansion in production of stainless steel as expected for 2008 has retreated to a large extent. This depressed production of stainless steel is thought to continue by spring to summer of 2009. Reacting to the problem of sub-prime loan, the investments in housing have shrunk and this aspect has directly hit stainless steel products to be demanded. Owing to the steeply risen prices of stainless steel products, the requirements of stainless steel products have been partially invaded by such plated steel sheets as surface - treated sheets, and so on. A crisis of electricity supply suddenly emerged from the end January of 2008 in South Africa has influenced on the industries there accordingly but, since South African producers are endeavoring to increase their production of ferro-chrome, the short supply so far does not come up. South Africa has been regarded as an eternal base to supply ferro-chrome but this myth of ferro-chrome is being amended but the current supply of ferro-chrome from South Africa has exhibited an effect of the increased production. India is one of the countries to supply ferro-chrome with an expectation for China but it has become remarkable from summer of this year that India has been selling high carbon ferro-chrome at discounted prices in the spot market. The sales of high carbon ferro-chrome (charge chrome) at lower prices (US$1.60 - 1.80 per lb. of Cr) than the benchmark price settled for charge chrome in Asian region have been already sporadically seen from June - July of this year and these sales have enlarged to the US market. The spot price of charge chrome sold in the US market in September has fallen to a level of US$1.60 - 1.70 per lb. of Cr, which had a considerable reduction from those (US$2.20 - 2.30) prevailed in March - April in the USA. For a reference, the benchmark price of South African regular charge chrome settled with Japanese consumers for shipments in July - September quarter is US$2.13 per lb. of Cr CIF and that for Europe is US$2.05 on DDP base. If China would continue to import more than 7 million tons per annum of chrome ore from the world sources for a long period, this country could improve an extent of their self- sufficiency. An elevation of self-sufficiency by domestic product will be able to modify an expectation for imports of ferro-chrome by China to a substantial extent. China already imported 4,206,000 tons of chrome ore in January - July of 2008, which had an increase of 840,000 tons (or 25%) compared to that in the same period of 2007 and included a large increase of 50% for the imports from South Africa. There is still a strong opinion in the market that a sharp increase of chrome ore exported from South Africa will be a temporary phenomenon. However, by means of contrarily utilizing a crisis of electricity supply emerged in South Africa, an intention to increase production of mineral resources in South Africa has caused to invite this consequence. South African producers of ferro-chrome have deepened their dissatisfaction to the Government of South Africa with an increase in exports of chrome ore. |
| last modified : Thu 18 Sep, 2008 [11:06] |
