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Japan Imported Ferroalloy Market Report; December 28, 2011
= Silico-manganese touched the bottom before a slight rebound =
Market outlook in Japan of the imported ferroalloys as of December 28, 2011 is as follows:

<> General view:
The year of 2011 is coming close to the end with full of events both at home and abroad, such as the Earthquake/Tsunami plus the nuclear plant failure at Fukushima, European economy crisis, flooding in Thailand etc. The European crisis brought about sharp rise in yen value, while the disaster in Japan's Tohoku area temporarily paralyzed the key industries such as the automobile industry. For the iron and steel industry, the New Year will be a year of restructuring as symbolized by the amalgamation scheduled in autumn of Nippon Steel and Sumitomo Metal Industries and, in the stainless steel industry, by the administrative merger between Nisshin and Nippon Metal Industry. It is therefore a big issue of concern as 2012 starts for the suppliers of ferroalloys what kind of changes will be made regarding the channels of procurement among the parties concerned, as such possible changes will certainly affect the buying attitude of the procurers.

<> Ferrosilicon:
The price in the contracts with the EF mills for the first quarter (January – March) of 2012 was agreed at Yen125,000/ton, down by Yen5,000/ton from the fourth quarter (October – December) of 2011. The level was based on US$1,400/mt CIF for the imported materials. In China, the power rate rise enforced on December 1, equivalent to US$40/mt increase in costs, has not been fully taken into account in the actual deals yet. Crude steel production in China is showing a sign of rebound from the past two low months (October/November), but mills seem to prefer wait-and-see for the time being rather than aggressively resuming large volume purchases.

<> Silico-manganese:
Early December, offers of the Indian silicon-manganese were once below US$1,000/ton CIF at US$980/ton, but the price level was recently modified to mean a small recovery to US$1,000/ton CIF, because the low level was taken as reasonable. With traders' short-cover buying, the quantity earmarked for export in January from India are said to be fully booked, i.e. all sold out. Due to the depreciation of Rupee in October, export prices from India dropped and, as the currency a little recovered recently, the prices got firm. However, the contracted prices with the EF mills for the first quarter (January – March) of 2012 were determined, based on the low offers from India of several weeks ago, at Yen93,000 – 95,000/ton reportedly with some contracts of a special discount at even below Yen90,000/ton. This is an unwelcome legacy of the fourth quarter of 2011 to the first quarter of 2012.

<> Charge chrome:
The benchmark for the South African charge chrome for the shipments during the first quarter of 2012 was agreed, as forecasted, to cut it by US5/lb. Market understood that the benchmark would have to be anyway reduced due to the substantially weakened Rand, the South African currency. Traditionally saying, the first quarter (January through March) is a season of higher output for the European stainless steel industry, meaning there is a good hope that consumption of ferrochrome will rise. In China, due to the lower ferrochrome output from domestic producers who chose curtailment rather than production at a loss, major stainless steel mills re-quoted their buying prices for January deliveries at a higher level, US91 – 93/lb (VAT unpaid). This move was in a sense a result of too much squeeze by the mills over the ferrochrome producers.

<> Low-carbon ferrochrome:
Initial offers by overseas producers presented to regular buyers were US208 - 210/lb for C<0.1% for the Q1 (January – March) of 2012 shipments, but they were subsequently revised downward to US205 - 208/lb. It is forecasted that the finally agreed price will be in the range of US204 - 208/lb, largely down from US218 - 224/lb as agreed for the Q4 (October – December) 2011 shipments.

<> Manganese metal:
Current offers of the metal of Chinese origin are at US$3,200/ton, down by US$100/ton from the level in mid-December. The price during December fluctuated within the range of US$3,300 +/- US$100/ton. Various factors such as the cost increase from the power rate rise and the forecasted lower demand from curtailment of stainless steel production etc. are involved in determining the direction of the market.

<> Molybdenum:
The year of 2011 can be summarized as "the buoyant first half and the depressed second half" more or less reflecting the mood in the steel industry of Europe and Japan. Current price of molybdenum oxide, at the end of the year, is US$13.20 – 13.50/lb, down by about 20% from US$16.20/lb in December last year. It is basically safe to say that the market basically bottomed out at the US$12.70/lb appeared early November. Forecast says the price for the first half of 2012 will be in the range of US$13 – 15/lb. Points to note are when and whether (i) major mines will decide and announce output cut and (ii) China will resume buying in a big volume.
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last modified : Wed 11 Jan, 2012 [10:01]
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