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| HOME >> Topics List >> August, 2009 >> 07 (Fri) |
| Fever In China To Increase Steel Production May Cause To Push Up Prices Of Ferro-Alloys |
| = Output Of Crude Steel In China Is Anticipated to Exceed 500 Million Tons In 2009, Stimulating Domestic Prices |
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Being stimulated by a fever to expand steel production in China, prices of bulk ferro-alloys (silico-manganese and ferro-silicon) in domestic market of China are rising steeply. According to the data released by National Bureau of Statistics of China, this country produced 267 million tons of crude steel in the first half (January - June) of 2009, and it is also forecasted that China will certainly produce more than 500 million tons of crude steel in the calendar year (January - December) of 2009. Benchmark prices of steel products in China have risen by 25% from April of this year. Under the circumstances, a recovery in steel production of China is putting an influence on prices of ferro-alloys as secondary raw materials for steel production and domestic prices of bulk ferro-alloys in China have risen to <> CNY5,700 per ton for ferro-silicon and <> CNY8,000 - 8,200 per ton for silico-manganese respectively in this week. A rise of domestic price for silico-manganese is substantial and it has risen by CNY600 - 700 per ton compared to that in last week. Chinese ferro-silicon is imposed by 25% of the duty on its export and Chinese silico-manganese is also imposed by 20% of the duty on its export. Therefore, current idea prices for exports on FOB China base, including these export duties, are <> ferro-silicon: US$1,170 per metric ton and <> silico-manganese : US$1,550 per metric ton. However, these idea prices for exports, based on domestic prices, are not workable on the market in Japan. In case of Chinese silico-manganese, Japanese customers have still held back to purchase this ferro-alloy even at US$1,400 - 1,450 per metric ton CIF. A recovery of steel production in Japan has delayed in comparison with an early revival in China and, accordingly, a substantial differential of the circumstances between Japan and China has existed. These high prices of Chinese bulk ferro-alloys for exports have included a large risk to commit and Japanese side is still not in a position to conclude contracts on these imports. Japanese consumers have intended to purchase Indian silico-manganese for shipments in September - October and afterwards and are now moving to import Indian product at US$1,250 per metric ton CIF Japan. In the same case as that of silico-manganese, some of steel mills in Japan have still relied on the cargoes of ferro-silicon to be delivered from stocks held in Japan by trading companies. However, according to an investigation by forwarding agents, the reality is that the quantities of ferro-silicon stocked by trading companies at warehouses in wharves of such ports as Kawasaki and Nagoya have been mostly normalized. For a reference, the capacity to export silico-manganese from India has been limited and, when Japanese side wants to place large inquiries for silico-manganese before suppliers, it will be necessary for Japanese consumers to shift their purchases to Chinese silico-manganese as a secondary countermeasure by taking into account of high duty to be imposed on export of silico-manganese from China but the cost to import Chinese silico-manganese into Japan will certainly raise. It has come a delicate time for judging these options, one of which is still too early to conclude contracts on imports of Chinese silico-manganese and another is to see a chance for contracts at present. The most suitable sources for Japan to import silico-manganese with small lots are India and South Korea but the transactions to import silico-manganese with large quantities into Japan have to rely on supplies from China. |
| last modified : Wed 12 Aug, 2009 [10:13] |
