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Market Tendency On Imports Of Ferro-Alloys At 17th August 2009
= Interest Is When Does Excessively Heated Steel Production In China Become Short Of Breath
The market tendency by item on imports of ferro-alloys into Japan at the 17th August of 2009 is as follows ;

<> General view = While a fever for steel production in China has become extraordinary, it is wondered when does the steel industry of China face a turning point or the industry will be still able to run on this high production. Accordingly, a change of the economic circumstances surrounding steel production in China has been marked. Reflecting a favorable tone on prices of ferro-alloys in domestic market of China, prices of ferro-alloys to import into Japan have been pushed up and further movements of prices for ferro-alloys in China are strongly interested in seeing. A key point is when does the Central Government of China enforce the measure to tighten financial situation but current prices of Chinese ferro-alloys are in the direction to rise further. The latest economic indices are (1) a forecast to expand the economy in China by 9.4% on an annualized base, (2) output of crude steel in China for July of this year increased by 13% to 50.7 million tons, and so on, indicating the excessively heated economy in China. On the other hand, according to a survey by Antaike of China, the total quantity of iron ore imported into China and stocked at main wharves has already increased by 29% and reached 75.2 million tons, which is a similar level to that (75.5 million tons) at the end September of last year. However, prices of ferro-alloys in China have aimed to rise further and price of manganese ore as raw material to be contracted with regular consumers in China for shipments in October of this year and afterwards is moving to be inevitable to have a further and substantial rise.

<> Ferro-silicon = In view of the depressed demand for ferro-silicon in Europe and the USA, Russia has taken the aggressive offensive to sell ferro-silicon for Japan and, accordingly, China was once unable to throw off the yoke of Russian sales but price of Chinese ferro-silicfon is now being offered sporadically at US$1,200 per metric ton CIF Japan with a lower price of US$1,150 CIF. The stocks of ferro-silicon held by Japanese trading companies have been reduced. Part of major trading companies have still held large stocks of ferro-silicon (in Chugoku area) but, unless these stocks bought at high prices are released to the market, supply and demand of ferro-silicon in Japan will be balanced. The movements in Japan to import ferro-silicon from other sources than Russia are encouraging Chinese suppliers.

<> Silico-manganese = The factors, which manganese ore to import into China has tightened its supply position and spot price of manganese ore is still moving to rise, have induced ferro-alloys producers to let feel an anxiety for pushing up its cost. Because of an opaqueness of price for manganese ore as raw material, Chinese producers are offering silico-manganese only with a successive and further rise. The latest price of silico-manganese offered from Chinese side is on a level of US$1,450 - 1,500 per metric ton CIF Japan, keeping a basic tone to rise price. Indian silico-manganese has been already sold out up to September shipment and, when the supply from India for shipments in October and afterwards is thought to be not so reliable, it is anticipated that Japanese consumers will book Chinese silico-manganese even at high prices. It is difficult to judge a timing for contract with Chinese side but, taking into account of a recovery in production of crude steel for the second half of 2009, steel companies of Japan are moving to negotiate with Chinese suppliers on new purchases of silico-manganese. India is also the country to import manganese ore as raw material and only the advantage for Indian silico-manganese to differ from Chinese silico-manganese is nil of the duty on export of silico-manganese and this duty is considerable to raise the cost. An issue of price for silico-manganese depends on an extent to rise price of manganese ore, which BHP Billiton will propose Chinese customers for shipments in October and afterwards.

<> Manganese metal = Being influenced by the matters, which domestic demand for manganese metal in China is increasing and Chinese producers are implementing to reduce their production of this metal, the supply situation of electrolytic manganese metal in China has tightened. According to an information, the actual cargoes of this metal in domestic market of China are unable to secure for August shipment. Domestic price of electrolytic manganese metal prevailing at present is on a level of CNY15,000 - 15,200 per metric ton ex. plant, having risen by CNY200 per ton from that in July. Also, Chinese electrolytic manganese metal is now being offered for export at US$2,800 - 2,900 per metric ton CIF Japan. Owing to an expansion in production of stainless steel and a steep rise of nickel price, the circumstances surrounding manganese metal are firming up and a depression of the exports from China has been covered by a favorable tone of domestic demand for this metal in China.

<> Charge chrome = The output of stainless steel products in Japan for June of this year recovered to 189,000 tons, corresponding to 65.4% of the level recorded in the same month of last year. At all events, the level of stainless steel products produced in Japan for August recovered to 90% of nominal capacity and, as a matter of fact, the Hikari Works of Nippon Steel & Sumikin Stainless Steel produced 50,000 tons of stainless steel in August at nearly full capacity. Owing to a recovery of the demand for stainless steel products from domestic market of Japan, ratio of domestic sales against exports has been improved to 50 : 50. In consequence of a revival in production of stainless steel, the stocks of high carbon ferro-chrome (charge chrome) at the end of June had been improved considerably to 4.5 months against monthly consumption but Japan is still the country, having held the largest stocks of high carbon ferro-chrome in the world. For a reference, the two companies of Merafe and IMF in South Africa are scheduled to resume their operations of electric furnaces from the second half of August to produce charge chrome. The operations on low levels are being improved gradually but high fee of electric power applied to winter time in South Africa has killed a profitability for production of ferro-chrome and, therefore, none of South African producers is able to return to full operation. Spot price of high carbon ferro-chrome in Europe has currently risen to a level of 95 US-Cents per lb. of Cr by 10 US-Cents higher than that in July but producers have been not satisfied with this extent of the rise. For a reference, the actual price of low carbon ferro-chrome (with carbon 0.1% max.) prevailing in Europe is US$1.95 per lb. of Cr.

<> Molybdenum = In view of the negotiations with major consumers in Japan scheduled to be taken place in autumn of this year to conclude yearly contracts for shipments in 2010, molybdenum producers have turned to an attitude to be reluctant to sell molybdenum but, on the other hand, the stocks of molybdenum at consumers in Europe and the USA have been already normalized. Some of consumers have sporadically shown an interest in new purchase of molybdenum and, therefore, prices of molybdenum products have been maintained on a firm tone. Some of the parties concerned have an opinion that price of molybdenum oxide at the end of this year is anticipated to be on a level of US$20 per lb. of Mo. It is being known that primary molybdenum mines will need a certain time to loosen their reduction of molybdenum production and to turn to an increase of molybdenum production. Spot price of molybdenum oxide actually sold has risen to a higher level of US$18.30 per lb. of Mo and a feeling of the tightness on supply of actual cargoes has deepened. Since China has trended to import high quality molybdenum, a sudden and sharp decrease of molybdenum to be imported by China is thought to be unlikely. On the other hand, when price of molybdenum oxide rises to US$20 per lb. of Mo, China will certainly produce molybdenum on a full scale and the activities to regain a loss so far suffered from molybdenum production will be inevitable.

<> Ferro-vanadium = Price of ferro-vanadium has suddenly risen steeply and reached a level of US$30 per kg. of V. Dealers are now offering ferro-vanadium in the price range of US$34.80 per kg. of V as a higher side and US$33.80 as a lower side, having risen by 36% compared with those prevailed at the end of June. A reaction to this steep rise of price for ferro-vanadium so far taken by consumers was unexpectedly cool but, as price of ferro-vanadium in last week had at once risen by 10%, a tension of price for ferro-vanadium in the market has suddenly deepened. An accident occurred on an early part of August at Vametco of South Africa and one employee was killed The time to resume its operation is difficult to foresee at present and this trouble caused a further rise of price for ferro-vanadium as seen in last week.
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