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Japan Imported Ferroalloy Market Report March 29, 2012
= Pitched battle in Europe ongoing for charge chrome Q2 benchmark =
Market outlook in Japan of the imported ferroalloys as of March 29, 2012 is as follows:

<> General view: South Africa's ESKOM, the parastatal power company, has been so far successful in buying back power from major power consumers including the charge chrome smelters. The smelters are therefore, as charge chrome output will be reduced due to short supply of power, trying to convince customers (buyers) to accept substantial benchmark price increase as a matter of course. The negotiation is heating up between the smelters and the stainless steel mills who are just prepared to accept an increase of only up to US¢15/lb Cr.

<> Ferrosilicon: The market in Europe bottomed out in February, making spot prices rebound since then to reach EUR1,250 - 1,300/ton ex plant at this writing. This current price level means an increase of EUR100 - 150/ton from the bottom. Based on the steady rise of spot prices, the suppliers intend to raise the quarterly price of the alloy delivered during the Q2 (April - June) to major European customers. The firm price trend is basically because the stocks at both of smelters and users declined to an appropriate level. However, the possibility seems slim that the price-rising trend in Europe will soon be applied to the Asian markets, as the influence of Chinese ferrosilicon over the European markets has been only limited due to the anti-dumping regulation. In Asia, especially in China, the ferrosilicon market has been very quiet these days, mainly because the growth in crude steel production in China was comparatively low, i.e. during the first two months of 2012 it was 2.2% compared to the same period of last year. The market is expected to steadily revive when the country's crude steel production picks up, and the recently-established production ceiling in Inner Mongolia is maintained.

<> Silico-manganese: The up trend in price of silico-manganese of Indian origin was halted as soon as the Japanese buying interest dwindled. Then, it already started this week (week 13) declining to below US$1,300, i.e. currently at US$1,280 - 1,290/ton CIF, down by more or less US$50/ton. The price agreed with the Japanese EF mills for deliveries during the Q2 (April - June) was around Yen115,000/ton delivered, so the price upon import has to be below US$1,200/ton with the current exchange rate. Japanese fresh buying is at halt as the buyers watch the market. With the rumor that one of the major manganese miners may raise ore prices for shipments in May, ferrosilicon market is becoming foggier.

<> Charge chrome: As mentioned above, the negotiation has been heating up. The mills in Japan are ready to reduce intake if the benchmark price increase turns out more than US¢15/lb Cr, in order to lessen the impact of the increase. Europeans are also basically taking the similar attitude, insisting on US¢15 as a maximum increase. The proposal of increase presented by the South African producers are said to be US¢25 - 35/lb Cr. As a matter of fact, the South African ferrochrome smelting industry will be obliged to keep fairly low production through to the end of summer (of the northern hemisphere), as the producers will curtail production until the end-May due to ESKOM's power buyback, and then will most probably continue the curtailment as usual during the season of high power rates starting from June to August. This fact is certainly making the benchmark price issue inevitably more serious than in the past quarters/years.

<> Low-carbon ferrochrome: It is viewed that the prices applicable to low-carbon ferrochrome shipped during Q2 (April - June) will be finally agreed within a couple of days. The trend is undoubtedly up. The offered price for Russian material is US¢215/lb Cr CIF. It looks likely that the increase in price will be agreed at between US¢10 and US¢15/lb. In Europe, current level is US¢215 - 220/lb Cr ddp, which is apparently the target producers are aiming at in the negotiations with Japanese users.

<> Manganese metal: Sluggish demand continues in China both from domestic users and for exports. This depressing trend has continued already for more than 6 months, causing suspicion that in China there has been already a significant structural change in demand. Possible reasons behind the suspicion are (i) enough availability of lower-cost nickel unit in the nickel-pig-iron, and (ii) growing substitution of the metal with lower-cost low-carbon ferromanganese. Offers of Chinese metal for export to Japan are basically unchanged at around US$3,100 - 3,150/ton CIF without a sign of rebound. This price level is too low for the smelters having no mine of their own to stay profitable.
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last modified : Wed 04 Apr, 2012 [12:46]
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