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| India And China Are Key Countries To Reduce Production Of Ferro-Chrome |
| = Prices In Europe Are Falling, Measure To Decrease Production Only In South Africa Has Limitation |
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A further fall of prices for ferro-chrome in the European market is remarkable. The market price of low carbon ferro-chrome (with chrome content of 58 - 62% and carbon content of 0.1% max.) produced in China and to be sold from cargoes stocked at warehouses in Europe has fallen to a level of 310 - 320 US-Cents per lb. of Cr CIF. However, as the quality of Chinese product is not reliable, actual business to sell Chinese low carbon ferro-chrome in Europe is unable to conclude and Russian low carbon ferro-chrome, as a substitutive material for Chinese product, is now being offered at 370 US-Cents per lb. of Cr CIF. Also, high carbon ferro-chrome, containing chrome of 65% and lower silicon, is still being offered at a higher price of 170 -175 US-Cents per lb. of Cr CIF but Indian high carbon ferro-chrome with silicon content of more than 2% is offered at 135 US-Cents per lb. of Cr CIF. Indian product is offered at a further discounted price but seems to be unable to contract even at this discounted price. The quantities of ferro-chrome stocked at stainless steel mills of Japan are excessive at present and, therefore, spot business of high carbon ferro-chrome is really unable to exist in Japan but some of consumers said that, if positive sale is wanted by someone, the price has to be a lower level than 100 US-Cents per lb. of Cr CIF Japan, because it was informed that South African charge chrome is now being offered at 100 US-Cents CIF. Such major South African producers of ferro-chrome as Samancor Chrome and Assmang have successively decided to reduce their production of charge chrome from October - December quarter of 2008. However, the production activities of ferro-chrome by India and China are a key point to sustain price of high carbon ferro-chrome. Unless producers in India and China join the line of battle, it is thought to be impossible to oppose a decline of the demand for ferro-chrome emerged from a reduction of stainless steel production. There is a strong view in the market that a depression on production of stainless steel will continue until the first half of 2009. Also, while South African producers have entered into the structure to decrease their production of charge chrome, the cost to produce charge chrome in South Africa is estimated to be 60 to 70 US-Cents per lb. of Cr and, therefore, this cost price is much lower than the current sales prices (the benchmark prices are 193 US-Cents per lb. of Cr CIF for Japan and 185 US-Cents on DDP (delivered and duty paid) base for Europe. These sales prices have allowed to be profitable for South African producers and, accordingly, the matter in question to be considered hereafter is how extent do South African producers reduce seriously their production of ferro-chrome. A good profitability for production of charge chrome in South Africa has a possibility to postpone a balance on supply and demand of ferro-chrome. Kluchevsky Ferro-Alloy Plant, which is a leading producer of ferro-chrome in Russia and has relied their sales mainly on the European and domestic markets, has entered into the structure to suspend their production of ferro-chrome for 2 weeks from last week in order to cope with a depression of the chrome markets in Europe and Russia. A circle to reduce production of ferro-chrome in other countries than South Africa is enlarging. This Russian company also produces chrome metal but has suspended this production from the beginning of October and is scheduled to resume to produce chrome metal as well as ferro-chrome from November. India and China have grasped a key for the world market of ferro-chrome but the accurate data on production of ferro-chrome in these two countries are unable to obtain. India has been on a basic tone to increase their production of ferro-chrome and to be eager to export more ferro-chrome. India produced 948,0000 tons of high carbon ferro-chrome in the fiscal year of 2007 / 2008, having increased by 18% compared with that (801,000 tons) in the preceding fiscal year, but has been still proceeding to increase the facilities for production of ferro-chrome in 2009. India also exported 520,000 tons of high carbon ferro-chrome in the fiscal year of 2007 / 2008, having had an increase from that (350,000 tons) in the preceding fiscal year. India is anticipated to increase further production and exports of high carbon ferro-chrome in the fiscal year of 2008 / 2009. It is estimated at present that India has the capacity to produce 1,300,000 tons per annum of ferro-chrome (by 53 electric furnaces with total transformer capacity of 803 MVA) and actually produced 948,000 tons of ferro-chrome in the fiscal year of 2007 / 2008, corresponding to an operation rate of 73% against the total capacity. India has possessed rich reserves of chrome ore in Orissa State and, in order to maintain a power to be competitive on exports of Indian ferro-chrome, Orissa Mining Corporation (OMC) has reduced from October the price of chrome ore to be sold in domestic market by 39% with a flexibility. Even if South African companies have reduced their production of charge chrome, the current price of high carbon ferro-chrome is still profitable for production cost even in India, where has to pay a higher fee of electric power, and it is supposed that the countermeasure to reduce production of ferro-chrome will be not adopted until the final phase to be not payable for production cost comes up. China imported 4,900,000 tons of chrome ore in January - August of 2008, having increased by 19% compared to that in the same period of 2007. On the basis of this pace, China will import chrome ore on a larger scale than 7,000,000 tons in the calendar year (January - December) of 2008. For a reference, China imported 6,100,000 tons of chrome ore in the preceding calendar year of 2007. According to the survey released by ICDA (International Chrome Development Association), it is estimated that China produced 1,060,000 tons of high carbon ferro-chrome in 2007. However, in view of the fact that China has restricted to import ferro-chrome in 2008 and is endeavoring to produce domestically more ferro-chrome, China has a big probability to enlarge their domestic production of ferro-chrome in 2008 to a scale of 1,500,000 tons per annum. The market price of high carbon ferro-chrome (with Cr content of 50% min.) currently transacted in China is accelerating to weaken on a basic tone and has fallen to a level of 90 US-Cents per lb. of Cr, having broken the price of 100 US-Cents. |
| last modified : Wed 05 Nov, 2008 [10:18] |
