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Japan: Imported Ferroalloys Market Report October 14, 2011
= Shaken by weaker resource-based currencies =
Market outlook of the imported ferroalloys as of October 14, 2011 is as follows:

<> General view:
The substantially weakened resource-based currencies, such as South African Rand and Indian Rupee have affected the prices of ferroalloys, Comparison between end-July and end-September shows that Rand became by 21%, Rupee by 11% and Russian Ruble by 16-17% all weaker. As a result (i) Q4 benchmark for the South African charge chrome to be shipped to Europe was agreed as "rolled-over", despite the desire of a major producer to raise it even a few cents, (ii) offered prices of silicomanganese by Indian suppliers for October/November shipment dropped to below US$1,200/ton CIF, down by about US$100/ton from the end-September price, (iii) the agreed low-carbon ferrochrome price for Q4 shipments to Japan also dropped. The financial crisis as originated from Greece seems deep-rooted. The speculative funds buying Rand, Rupee and Brazilian Real as favored currencies on rich resources have started getting out of the game by selling back the currencies. This has caused those currencies to get weak and put the markets into confusion. Ferroalloy market is no exception, of course.

<> Ferrosilicon:
Last year, October was in panic, when ferrosilicon price went up to US$1,900/ton due to sudden stop of power supply in China. This year, power supply situation in the two major producing provinces, Inner Mongolia and Ninxia, has been comparatively stable and there is little worry about supply. Offered prices from Chinese major suppliers are in the range of US$1,540 - 1,550/ton, a bit softer, reflecting the currently weak domestic market due to slower demand from magnesium producing sector.

<> Silicomanganese:
Indian offered prices are declining on the weaker Rupee. The offers on the low side are US$1,180 - 1,200/ton, below the US$1,200 line. At the end of September, US$1,300 was the mainstream, so the level maens a drop of US$100/ton in a short time. At the moment Rupee is at more or less Rs49/US$ with worries of further drop. It was stable at Rs44-45/US$ in the past months, but the drop happened suddenly and sharply. In addition, there is apparently an export drive to Japan, as Europeans demand is dull.

<> Charge Chrome:
Benchmark price for the Q4 shipments to Europe was agreed as unchanged. A South African major producers presented US5/lb increase to cover the increased costs in a vain attempt. In a sense the depreciation of Rand, by as much as 21%, is one of the major but indirect reasons of the agreement this time. If this trend of Rand's exchange rate continues, the South African producers will try to expand production in the near future on improved costs. Although the benchmark system is regarded as, in a sense, nominal in the European markets, it is still useful especially as a price standard for long-term contracts involving supplies of stainless steel products.

<> Low-Carbon Ferrochrome:
Middle in the price range in the term contracts for C<0.1% October - December shipments was US220/lb CIF. There was a deal with a big user done reportedly at a little lower level like US218. Originally Q4 negotiations started with offers of more or less US223-224/lb but ended up with the middle price of US220/lb, a bit softened from Q3's (July- September) middle price at US222 - 226/lb.

<> Metal Manganese:
Compared to the sharp price drop of nickel, manganese metal price drop has been at a much slower pace with specific reasons unknown. Current price is at US$3,820 - 3,830/ton CIF Japan, just US$30 - 50/ton drop from September price. Importers (buyers) are wait-and-see, expecting further decline under the weak sentiment in the market. It is a kind of tug of war.

<> Molybdenum:
Prices among dealers are US$13.30/lb, the lowest since 22 months ago. Main reason is oversupply with Chinese retreat from imports, down to almost a half from last year, and consequently some desperate sellers were seen. It has become a common understanding that supply of molybdenum as by-product at lower costs from copper mines is steadily increasing, as more and more copper deposits are developed in the western world. Therefore, the price may, several market sources say, inevitably fall down to US$12/lb, the break-even line for Chinese producers.

<> Metal Silicon:
Offered price after the holiday was US$2,650/ton CIF for 5.5.3 grade. It is likely that sellers will go bullish as dry season comes up.
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last modified : Fri 04 Nov, 2011 [12:19]
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