The TEX Report Topics < Ferro Alloys > Home
HOME >> Topics List >> October, 2011 >> 03 (Mon)
Market Report On Imported Ferroalloys To Japan As Of September 30, 2011
= Repercussion seen from gloomy outlook of European economy =
Market outlook of the imported ferroalloys as of September 30, 2011 is as follows:

<> General view:
Overcast economy outlook in Europe as derived from monetary crisis is adversely affecting the ferroalloy market. One of the adversities is the sharp drop of LME nickel price on September 23 (down to below US$8/lb, a low level ever since the Lehman's Fall), which is symbolizing a direction for the other metals including ferroalloys to follow. The influence is already seen so far in exports to Europe of ferrochrome from South Africa, silicomanganese from India and manganese-bearing ferroalloys from Norway - less demand and low prices are leading to forced production cut on supply side.

<> Ferrosilicon:
Affected by silicomanganese prices as agreed with the mills for the October - December quarter in the contracts with the EF mills (see below), ferrosilicon prices for the same quarter ended up with reduction from July - September quarter of Yen3,000 - 5,000/ton, bigger than what the traders/merchants assumed on the appreciated yen. In China, the government applied this year's third power rate adjustment (actually "raise") in September this time to Guangxi so far, but it may spread over to the other provinces during autumn. This raise inevitably affects production costs of Chinese ferrosilicon to rise, and should serve as a support for the price in US$. However, due to the low-priced offers of Chinese origin through the roundabout trades via Vietnam, buyers in Japan are, in Yen-based contracts, pressing sellers for further price-cut.

<> Silicomanganese:
Traders were obliged to accept price-cut of Yen5,000/ton with the EF mills for the October - December quarter, despite the seller's expectations that reduction of Yen3,000/ton will do. Delivered (to the receiver's yard) prices were mostly in the range of Yen110,000 - 115,000/ton. This means that, like ferrosilicon, seller's had to accept more reduction than the calculated influence from the Yen appreciation. Some of the stocks at distributors are reportedly US$1,300/ton (CIF) or higher, which will generate loss even if they can sell the stocks at Yen115,000/ton. Based on this situation, traders' bid level against new offers of Indian material will be hard-edged.

<> Charge Chrome:
No concrete news/move yet about the October - December quarter's benchmark for the South African charge chrome to Europe. Of special note is that how much the Rand's sharp drop against US$ will affect the ferroalloy prices. Rand had been stably at R6.8/US$ before it started to weaken a bit in August. Then it started, as the European economy quickly worsened, to drop day by day in September and fell to 8.4 just recently. Currently it stands at around 7.9, which means the South African currency depreciated by more than 14%. This of course helps the South African producers to mitigate the increasing production costs calculated in US$, but at the same time it could serve as a good weapon for the buyers in the benchmark negotiations. One thing which is obvious is that the currency issue can no longer be a point to be discussed to "raise" the price in the benchmark negotiations for the October - December quarter.

<> Low-Carbon Ferrochrome:
Negotiations are going on for October- December quarter shipments with Japanese customers. Some contracts are said to have been concluded with a big-lot buyer (a specialty steel mill). Offers for C<0.1% from major suppliers including Russian producers are in the range of US223 - 224/lb Cr, at which level deals seem unlikely, as buyers are apparently prepared to agree at least at US1 - 2/lb lower. Anyway, there will be contracts within a week time. It was noted that during the July - September quarter, some of the actually contracted prices were a bit below the quarter's "benchmark" as quoted in Tex's past issue, under a sort of turbulent market atmosphere. However the market during October - December quarter is expected to be a quiet/stable one, because of the price drop in the previous quarter somewhat mitigating tension in the market, and of comfortable recovery of production at specialty steel mills.

<> Metal Manganese:
It is said that manganese price will soon be anyway adversely affected by the sharp drop on September 23 in LME price of nickel, a "competing" metal for manganese in stainless steel production. On the other hand, power price was raised in Guangxi, China and will be raised in nearby provinces in the near future. So, it is uncertain to which direction the price of this metal will go. The price level currently offered is US$3,850/ton CIF, still a bit higher level than market anticipated.

<> Molybdenum
There is little sign of recovery in demand from China. Molybdenum's trade balance in China was excess of imports in July following the previous month, but the quantities imported during the months were still far lower than in the same period of last year. Based on this fact it is probably safe to say that China is not prepared to uphold molybdenum's softening international price. Dealers' offers of Mo oxide are in the range of US$14.35 - 14.45/lb, a bit declining. Some say that China is going to be a self -sufficient country by increasing consumption of domestically produced molybdenum. If so, it is difficult to see China's return to the international market as a big importer as they were in 2009 and 2010.
data image
last modified : Thu 06 Oct, 2011 [10:25]
Copyright (C) 2004 The TEX Report Ltd. All Rights Reserved.