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| Eti Krom / Turkey Reduces Price Of Chrome Ore For Shipments In Q4 / 08 |
| = Eti Krom Views As Fundamentals For Chrome Will Still Maintain Firm Tone |
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Eti Krom Inc., which is an affiliated company of Yildirim Group and a major producer of chrome in Turkey, released in last week their forecast of the chrome market. In the course of this outlook for chrome businesses, Eti Krom pointed out the followings ; <> Eti Krom has decided to reduce export price of chrome ore by US$200 per dry metric ton for shipments to China in October - December quarter of 2008., <> South Africa, Oman, and so on have taken an aggressive attitude for their exports of chrome ore., <> Reflecting the decreased production of stainless steel, Indian high carbon ferro-chrome is being offered at discounted prices and, under this situation, it will be reasonable to roll over the benchmark price of South African charge chrome for shipments in October - December quarter., <> However, since South Africa has faced a crisis of electricity supply from the end January of this year, the matter to increase production of ferro-chrome in South Africa has been restrained for a certain period and prices of ferro-chrome are anticipated to maintain the firmness on a basic tone. The contents of Eti Krom's forecast are as follows ; (1)Market Situation of Chrome Ore (1-1) An outlook for chrome ore in 2009 is that, in addition to an expansion of chrome ore production in South Africa, Oman and Turkey have been increasing chrome ore production and the world capacity to export chrome ore is on a basic tone to enlarge, following the same case in 2008. This tendency will continue even in 2009. On the other hand, the strong demand for chrome ore will remain on a high level and the imports of chrome ore by China, Sweden, Russia and even India are anticipated to continue in 2009. China is supposed to import more than 8 million tons per annum of chrome ore. In addition, new demand to import hard lumpy chrome ore is coming up in India, in order to increase production of ferro-chrome. However, chrome mines in South Africa have been expanding the capacity to produce chrome ore and, consequently, there is a possibility that a certain part of the increased demand for chrome ore will be absorbed by South African ore. (1-2) The market prices of chrome ore could so far have maintained high levels and part of this aspect had been sporadically pushed up by the soared prices of mineral resources. Nevertheless, China is a major country in the world to import chrome ore but has been currently suffering from an unprofitable production of ferro-chrome because of the steeply risen price of chrome ore as raw material. Therefore, some of Chinese enterprises are attempting to shift their production item from ferro-chrome to other ferro-alloys, such as manganese ferro-alloys, and this change of production item is due to the depressed market prices of ferro-chrome in China. (1-3) Owing to the positive imports of chrome ore into China, the stocks of chrome ore imported by China and accumulated at wharves of discharging ports have inclined to increase. As a matter of fact, China imported 720,000 tons of chrome ore in July of 2008, having recorded the higher level, but this increased import of chrome ore into China is thought to be still continued in August and September. This excessive import of chrome ore by China was mainly caused by a rushed flow of low grade ore from South Africa and Oman. It has been currently understood in China that the business to import chrome ore into China is rather advantageous than that to produce ferro-chrome in China. As seen from a bitter experience which Chinese producers suffered from an unprofitable production of nickel-contained pig iron in 2008, the business to produce ferro-chrome in China has now turned to an unprofitable operation. (1-4) The international prices of chrome ore had once soared but are now thought to change to a direction to fall from October - December quarter of 2008. A period to rectify the steeply risen prices of chrome is supposed to continue in 2009. Particularly, market price of low grade chrome ore is anticipated to weaken. Owing to the oversupply of chrome ore, market prices of chrome ore are anticipated to fall by more than 30% in 2009. In view of the market situation as mentioned above, Eti Krom has decided to reduce their export price of chrome ore by US$200 per ton for all grades to be shipped in October - December quarter of 2008. This reduction of the ore price is to encourage the hardship at producers of ferro-chrome faced by the increased costs. Eti Krom is scheduled to export 100,000 tons of chrome ore for China in October - December quarter. Eti Krom has also planned to perform the same responsibility for Sweden. For a reference, the prices of hard lumpy chrome ore contracted by Eti Krom with Chinese customers for shipments in April - June quarter and July - September quarter of 2008 were <> US$650 - 725 per dry metric ton on basis of CR2O3 42% and <> US$725 - 800 per dry metric ton on basis of Cr2O3 44%. (2)Market Situation of Ferro-Chrome (2-1) The market for ferro-chrome has entered into an unstable period. Eti Krom is now watching carefully about how to move the benchmark price of South African charge chrome for shipments in October - December quarter of 2008. Reflecting a boom of chrome prices emerged in January - March quarter of 2008, the price of charge chrome achieved to rise to a level of US$1.00 per lb. of Cr but India, where has held an advantage of chrome ore as raw material, has been endeavoring to sell high carbon ferro-chrome at discounted prices to stainless steel mills in Europe, the USA and Asia and, consequently, the parties concerned have a view that market prices of ferro-chrome will weaken toward to the end of this year. The prices of Indian high carbon ferro-chrome with higher silicon content sold in the last 2 -3 months were in the range of US$1.60 - 2.00 per lb. of Cr (on DDP base) but it seems that Indian suppliers have felt the difficulties to obtain new consumers. The price of regular high carbon ferro-chrome (charge chrome) contracted will still have a margin to be able to compete with Indian product, when such arrangements as quantity discount are taken into consideration. On the other hand, Turkish producers are also facing such cost increases as electric power fee oil price, wages, and so on. In particular, electric power fee is scheduled to raise by 11% from the 1st October of 2008. Since January of 2008, Eti Krom had totally about 45% of power cost increases in Turkey. (2-2) In spite of a sharp fall of nickel price, a power to produce more chrome-based stainless steel does not weaken. The consumption of chrome on net base has stayed on a firmness. It is still forecasted that the consumption of ferro-chrome in Europe and the USA will revive in October - December quarter of 2008. The basement to expect some rise of prices for ferro-chrome in 2009 is thought to be coming up. (2-3) A cyclical upswing on production of stainless steel in the world is expected and the global production of stainless steel in 2009 has been viewed by an analyst to increase by 10%. A positive opinion for chrome on a long run is able to support but, in view of the depressed world economy, a recovery of the demand for ferro-chrome will be postponed to some extent. The benchmark price of South African regular charge chrome for shipments in October - December quarter of 2008 is still anticipated to have a rise of 10 - 20 US-Cents per lb. of Cr but a strong possibility is to roll over the price from that for July - September quarter. |
| last modified : Thu 25 Sep, 2008 [11:07] |
