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Japan Imported Ferroalloys Market Report; November 30, 2011
= Hard days ahead for stainless steel industry; currently in operation at below 70% of capacity =
Market outlook in Japan of the imported ferroalloys as of November 30, 2011 is as follows:

<> General view:
Slump in stainless steel industry is looming up – much closer. Major mills are operating at less than 70% of their capacity. Nisshin, the only one whose mills were operating at more than 80%, is reportedly mulling to lower the operational rate to below 80%. The sharp appreciation of yen currency since July made the export business less competitive resulting in less incoming orders, and the drastic fall of LME nickel price by about 17% since September will eventually cause a big loss from re-evaluation of inventories. Under such circumstances, some major mills will be obliged to post a large loss in the second half (July – December) of 2011. The slump has just started. Ferroalloy sales will face a tough environment.

<> Ferrosilicon:
The high and increasing inventory at the producers in China is the basis for the bearish views in the market. The weak sentiment was initially brought by declining domestic demand and by stagnant exports, but now, over-production is aggravating the situation. To solve the problem, production curtailment is definitely unavoidable. Offers from major producers/sellers are at US$1,480 – 1,490/ton CIF Japan, down by US$30 - 40/ton compared to the price of end-October.

<> Silico-manganese:
Some offers of Indian silico-manganese are low at US$1,050/ton CIF Japan, and the lowest level of price for Korean high-carbon ferrochrome is US$1,100/ton CIF or a bit less. Market of manganese group alloys is still softening, mainly because the exports to Europe and U.S. became very much depressed. In Russia and Korea, annual production capacity of the alloys in each country now exceeds one million tons by expansion after expansion. Therefore the economy crisis in Europe and U.S.A. is undoubtedly giving a big negative impact to those countries whose exports hold some 50% of the total production.

<> Charge chrome:
No information has been made available yet about the Q1 (January – March) of 2012 benchmark. In Japan, some of the plans of spot purchases have been shelved due to the reduced output of stainless steel. According to some sources in the industry, NSSC was planning to buy 3,000 tons on spot basis but the plan was not realized, while Nisshin made a spot purchase of South African origin. In spot deals, producers/sellers are required these days to accept a substantial discount, in other words a price of US$1.00/lb Cr CIF Japan or less.

<> Low-carbon ferrochrome:
It is still too early to start negotiation for Q1 (January – March) of 2012 with Japanese regular customers, but in Europe under a little softer market US$2.10/lb Cr (C<0.1%) ddp is becoming the prevailing level. The players in Europe are, in addition to the major and regular suppliers from Russia, Kazakhstan, from South Africa, Germany and Japan, in a more severe competition with each other than before. The mean of the contracted prices with regular buyers in Japan for the Q4 (October – December of 2011) was US$2.20/lb Cr, and US$2.18/lb Cr in lower-priced deals.

<> Molybdenum
Price in the international markets fluctuated in November. In the first week, molybdenum oxide price was at US$12.70/lb, this year's lowest, and then in the second week it rebounded from the bottom to US$13.10/lb. In the third week it reached US$13.70/lb, but softened to slide a little to US$13.50/lb in the fourth week. Most probably merchants covered their short positions during the past several weeks. It can be safely said that the market did hit this year's bottom early November and the current level will continue over the year-end. US$12 – 13/lb, the said-to-be breakeven point for the Chinese producers is probably the support level in the current market. The price fell by as much as 30% sine the beginning of this year mostly due to over-production.

<> Manganese metal
From the growing uncertainty under the Chinese stainless steel mills' production curtailment, the market in China became bearish. Local price once dropped to RMB16,000/ton, but slightly rebounded by RMB100 – 200/ton to RMB16,200/ton level just recently. The generally bearish sentiment and weak demand from abroad allowed the most recent offers for Japan to slide to US$3,350 – 3,400/ton CIF.
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last modified : Tue 06 Dec, 2011 [13:58]
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