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Japan FeCr Consumption Review; Jan. - Sep. 2011
= Fine until September; but overcast from Q4 due to the curtailment, then? =
Review of ferrochrome consumption in Japan during the first nine months of 2011, details of which are as per the table attached hereto shows that production of crude special steel during the period was 17.99 million tons, down 0.8% year-on-year, while production of stainless steel in the same period was 2.274 million tons, down 1.5% year-on-year.

Production of crude special steel, including stainless steel was comparatively steady until September, but due to the sharp appreciation of yen currency, which damaged profitability of exports, it became the industry's big concern whether and/or when to enter production curtailment, and at the same time the environments for the ferrochrome consumption started to gradually change. The curtailment adopted by the stainless steel mills in October/November cast uncertainties over consumption of ferrochrome in the coming months.

Ferrochrome consumption in Japan during the nine months was, <> high-carbon (including charge chrome): 523,325 tons, up by 6.4% from 559,060 tons in the same period of 2010, <> low-carbon: 34,601 tons, up 10.1% from 31,412 tons in the nine months of 2010.

Demand for the low-carbon is basically from production of special alloys used in automobile parts, so it was not affected so much by the stronger yen as the demand for high-carbon was. On the other hand demand for high-carbon (including charge chrome) had been steady, but the decision of curtailment in October/November by the stainless steel mills cast dark clouds over the high-carbon's future.

Ferrochrome imports to Japan during the nine months of 2011 were, <> high-carbon: 574,887 tons, up by 2.2% year-on-year, <> low-carbon: 41,778 tons, largely up by 46.2% year-on-year. Low-carbon's big increase was partly because the imports in the same nine months of last year were unusually lower from pullbacks by consumers. It is true however that consumption of low-carbon in the period of 2011 was steady at a higher level, i.e. more than 10 % growth year-on-year as said above.

As to the price of charge chrome (benchmark for Japan), it fluctuated as follows, US$1.33/lb in Q1 (January - March), US$1.43/lb in Q2 (April - June), US$1.28/lb in Q3 (July - September), US$1.28/lb in Q4 (October - December). The up trend in Q2 failed to last until the next quarters, because of the depressed demand in Europe and Chinese smart buying strategy at bargain prices.
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last modified : Mon 12 Dec, 2011 [12:02]
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