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| HOME >> Topics List >> November, 2008 >> 27 (Thu) |
| Outlook For Ferrochrome Market By Dr. Konchar, Chairman Of Kermas |
| = Standby On Recovery Of Economy By Balancing Supply / Demand Of Fe-Cr Through Reduced Production Etc. |
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Doctor Danko Konchar, CEO and Chairman of Kermas as the parent company of Samancor Chrome in South Africa, came to Japan and had an interview with our pressman (Mr. H. Saitoh) on the 25th of November at The Imperial Hotel in Tokyo. At this meeting, in a form of replying to the questions placed by our pressman, Doctor Konchar commented on an outlook for the ferrochrome market, particularly that in 2009. In the course of this interview, Doctor Konchar said that Samancor Chrome, having a capacity to produce 1,350,000 tons per annum of ferrochrome, is scheduled to operate by 50 - 60% of this capacity in the first half of 2009. The contents of his comments on ferrochrome are summarized as follows ; (1) When the world economic situation has faced a difficult time, the matters to be implemented are perfect management of financing and adjustment of ferrochrome production to a necessary scale. Our company has been performing these matters. Therefore, Samancor Chrome is now operating only 6 electric furnaces out of 15, which is less than 40% of its total capacity. Our company is the producer of only ferrochrome and, accordingly, the reduced production of stainless steel has put a substantial impact on our production of ferrochrome in comparison with other companies producing various ferro-alloys but, as a countermeasure to avoid unnecessary consumption of fund, our company has already arranged to curtail production, to reduce raw materials, and so on. (2) With regard to forecast of stainless steel production in 2009, I have a similar feeling to that exhibited by Mr. Heinz Pariser (who forecasts 27.26 million tons in 2009 = a decline of 4.5% from that in 2008). Namely, the world production of stainless steel in 2009 will decrease by some 1.3 million tons compared with that in 2008. Some say about 1 million tons of FeCr production will have to be trimmed next year, but our company foresees substantially more FeCr production curtailment will be definitely required, considering the current high level of world inventory. The decrease in stainless steel production means loss of about 500,000 tons of ferrochrome need. In addition, I estimate the current world FeCr inventory is (2-1) 1,000,000 - 1,500,000 tons at producers and (2-2) a little less than 1,000,000 tons at the consumers, totalling : a little higher than 2,050,000 tons, while the " pipeline stocks " are normally required, corresponding to consumption for about 2 months. Accordingly, a surplus of ferrochrome in 2008 is supposed to come to the range of 1,500,000 tons per annum. (3) As mentioned above, Samancor Chrome has the capacity to produce 1,350,000 tons per annum of ferrochrome but is scheduled to operate at 50 - 60% of this capacity in the first half of 2009. On the basis of this operation, Samancor Chrome will produce approximately 350,000 tons of charge chrome for the first half of 2009 but this output includes about 510,000 tons for both of IC-3 (medium carbon ferrochrome) and mother material for production of low carbon ferrochrome and, consequently, the net quantity of charge chrome to be sold by Samancor Chrome in the first 6 months of 2009 is estimated to be some 300,000 tons. For reference, the company's capacity is 1,350,000 tons per annum, which includes the newly installed electric DC furnace (M4) at the Middleburg plant. (4) The discussion on regulating exports of South African chrome ore is not progressing. Under the current economic circumstances, the business to export chrome ore from South Africa to China has turned to be much less attractive because of excessive stocks of chrome ore in China. Also, prior to general election in South Africa in 2009, the political situation in the country has entered into a busy season, causing slow development of the legislative move. (5) In April, 2008 when I visited Japan, a crisis of electric power suddenly emerged in South Africa and an anxiety for the worldwide shortage of ferrochrome arose in the market. However, under the present situation after having passed half a year, things have totally changed and every FeCr producer in the country does not need so much power. (6) The circumstances surrounding ferrochrome are deteriorating rapidly and, in a very wide scale, in order to cope with a global recession of economy, the industry must quickly promote matters of (5-1) large scale production curtailment, (5-2) trimming of incompetitive capacities, (5-3) destocking the current huge stockpile, and so on. |
| last modified : Tue 02 Dec, 2008 [10:44] |
