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| HOME >> Topics List >> November, 2008 >> 20 (Thu) |
| Forecast Of Prices For Chinese Ferro- Alloys Is Still Opaque In Spite Of Strengthened Cutback |
| = The Stocks At Chinese Steel Mills Decreased Considerably But Crude Steel Production Has Been Depressed |
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A forecast of prices for Chinese ferro-alloys (silicon ferro-alloys and manganese ferro-alloys) has still included many opaque factors. The current prices have fallen to US$1,400 - 1,450 per metric ton CIF Japan for silico-manganese and US$1,200 - 1,300 CIF for ferro-silicon, and these prices are not payable for costs at Chinese producers. When the present situation of Chinese ferro-alloys has been analyzed, in view of the factors of (1) the strengthened reduction of ferro-alloys to be produced in China is causing to progress the adjustment to balance its supply and demand, (2) but, the cutback of crude steel production in China started from September of 2008 has a big probability to continue even after Lunar New Year in February of 2009 was over, (3) the excessive stocks of ferro-alloys at steel companies of Japan are anticipated to be resolved only in January - March quarter of 2009, and so on, the circumstances to get out from a tunnel of the turmoil will come up on a far distance. However, the Central Government of China is scheduled to enforce from the 1st January of 2009 the system to issue licenses for exports of Chinese ferro-alloys but, in the course of qualifying exporters, a possibility to occur an unexpected happening has been concealed. There is a probability, which powerful exporters are not qualified, and a confusion of the orderly exports on Chinese ferro-alloys to be arisen from enforcement of the EL (expot license) system has lain down as a wild card. It seems to be necessary to watch carefully about further developments of these matters in December. Chinese companies commenced to decrease their production of ferro-alloys (silicon ferro-allys and manganese ferro-alloys) from September of 2008 on a substantial scale and, in an extreme case, some of these producers have reduced their operation by 80 - 90% of their capacity. Such major Chinese producers as Erdos (to produce ferro-silicon) and Bayi Ferro-Alloys (to produce manganese ferro-alloys) have entered into the structure to decrease their production of ferro-alloys to a considerable extent. Chinese steel companies are now going to release their latest settlement of accounts. The total loss at 32 leading steel companies came to CNY25,000 million and there is a strong view in the market that the decreased steel production at Chinese mills (in comparison with that in the same period of 2007) started from September of 2008 will continue in Lunar New Year in February of 2009 and afterwards in the range of a reduction of 10 - 15%. On the other hand, the stocks of ferro-alloys at Chinese steel mills were once said as an excess but have now decreased to a lower level than its normal figures. In order to adjust the excessive stocks of ferro-alloys at Chinese steel mills, these mills cancelled the existing contracts and held back new purchases of ferro-alloys from summer of 2008. Consequently, the total quantity of ferro-alloys stocked at Chinese steel mills as of the Beijing Olympic Games held in August was excessive by more than one month from normal consumption but Chinese mills have now got out from this aspect. The present stocks of ferro-alloys at Chinese mills have become thin and are supposed to have been reduced to a low level, which is less from one week. There is an opinion in the market that, if a possibility to revive crude steel production in China is foreseen, the situation to induce new purchases of ferro-alloys will at once come up. On the other hand, steel companies of Japan are thought to commence from now their substantial reduction of steel production. Also, as regards the stocks of ferro-alloys at Japanese mills, in order to cope with the Beijing Olympic Games in August, the stocks became excessive and the purchases made over-commitments. Accordingly, steel companies of Japan have been still suffering from these two problems and a target to finish an adjustment of the stocks has been carried over to January - March quarter of 2009. Therefore, the quantities of bulk ferro-alloys to be purchased by electric furnace mills at Yen prices for shipments in January - March quarter of 2009 are anticipated to decrease to a large extent. The background has aimed to reduce book values of raw materials in preparation for settlement of accounts to be closed on the 31st March of 2009. |
| last modified : Wed 26 Nov, 2008 [10:16] |
