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|Cutback Of FeCr Production Is Still Continuing With Opaque Prospect For Future|
|= Only 7 - 9 Electric Furnaces In Total Are Currently Being Operated In South Africa|
The matter in question of how long does the structure to reduce production of ferro-chrome continue is still unable to foresee its exit at present. While nickel is also raw material for production of stainless steel, being stimulated by a recovery of copper price, nickel price has rebounded by 11 - 15% from the bottom but this rise of nickel price is due to the scalping by funds and does not connect with the case to release cutback of nickel production.|
South African producers of ferro-chrome have entered from October of 2008 into the structure to reduce their production and it has already passed 7 months by April but it has started to fell really in the middle of April that price of high carbon ferro-chrome (charge chrome) has slightly bottomed out. This is only the case that price of charge chrome has at last turned to rise to 65 US-Cents per lb. of Cr from 58 US-Cents, which is a lower level than 60 US-Cents, but this rebound of price for charge chrome is still far from the level to be payable for its production cost.
On the basis of the date, which ICDA (International Chrome Development Association) has compiled and released and the enterprises concerned have reported, the quantities (on material base) of high carbon ferro-chrome produced by main companies in the world in 2008 and the numbers of electric furnaces suspended to operate by them are as per the table attached hereto. South Africa is the kingdom to produce ferro-chrome but is estimated to be currently operating 20 - 30% of electric furnaces and approximately 40 electric furnaces are supposed to have been idled.
IFM once suspended to operate all of two electric furnaces but resumed to operate one of these two furnaces from April of 2009. Assmang is scheduled to operate two electric furnaces by the end of May but has planned to suspend all of four electric furnaces from June. Therefore, the movements at South African producers are uneven. In view of the fact that South Africa enters into winter season in July - September quarter and higher fee of electric power is applied, April - June quarter is usually a period to increase production of ferro-chrome but a plan to resume operation of electric furnace is not heard yet.
For a reference, Zimasco of Zimbabwe has resumed to operate two electric furnaces at the Kwe Kwe plant from the middle of April. Zimasco had suspended to operate six electric furnaces from November of 2008 but Mugabe President ordered this resumption of the operations and Sinosteel of China, as the partner, supported this movement by financial assistance (US$8 million). This is a rare case as seen only in Zimbabwe.
According to a preliminary report by ICDA, the world output of high carbon ferro-chrome in 2008 is estimated to be on a level of approximately 7.23 million tons, having decreased by about 5% compared with that (7.64 million tons) in the preceding year of 2007. In comparison with the severity of production in 2009, the output as mentioned above has been felt with a soft tone but an outlook for production of ferro-chrome in 2009 is dark .
The output of high carbon ferro-chrome in the world for the first half of 2008 had a certain increase and this expansion of the production diluted the considerable reduction commenced from October - December quarter of 2008. Namely, <> South Africa reduced the production by 8%, <>Kazakhstan had a decline of 11% and <> India had a decrease of 8.5% compared to those in the same quarter of 2007. Therefore, all of major countries in the world to produce high carbon ferro-chrome had reduced their output to a substantial extent. However, in view of the fact that China imported chrome ore with excessive quantities, it is supposed that China would have increased their production of ferro-chrome in 2008.
The world output of crude stainless steel in 2009 is estimated to be 22.00 million tons with a decrease of 16% from that in 2008 and, accordingly, the actual consumption of ferro-chrome in the world for 2009 will have a possibility to come down to a level of 5,000,000 tons. Being stimulated by a temporary rebound of nickel price in April, stainless steel mills in China and Taiwan are in the mood to expand their production of stainless steel but a surge of this revival is still not enough. This aspect is due to an unexpectedly deepened depression of the economy in Europe. Only the factor is to expect a recovery of the economic situation in October - December quarter of 2009.
The quantities (on material base) of high carbon ferro-chrome imported into Europe in the last 3 quarters were <> in July - September quarter 2008 : 478,000 tons (including 295,000 tons from South Africa), <> in October - December quarter : 383,000 tons (including 225,000 tons from South Africa) and <> in January - March quarter 2009 : estimated at 227,000 tons (including 133,000 tons from South Africa), having decreased to less than half of the imports reached a peak. This aspect has suggested the depressed production of stainless steel.
The total quantity of high carbon ferro-chrome stocked at stainless steel mills of Japan is estimated to be approximately 250,000 - 280,000 tons at present (228,000 tons were stocked as of the 28th February of 2009), corresponding to the consumption in Japan for 10 months, Having differed from the excessive stocks of high carbon ferro-chrome in Japan, major stainless steel companies in Europe, including ArcelorMittal, drastically cancelled in November - December of 2008 their contracts on imports of ferro-chrome and / or requested to delay the shipments. Consequently, it is expected that the purchases of ferro-chrome by European mills will be recovered soon. However, as far as the realities to import ferro-chrome into Europe are concerned, the demand to purchase again ferro-chrome is still not felt to recover.
|last modified : Fri 08 May, 2009 [10:40]|