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Japan Imported Ferroalloy Market Report - April 27, 2012
= Return of cheerful growth in China's crude steel production =
Market outlook of the imported ferroalloys in Japan as of April 27, 2012 is as follows:

<> General view: China's crude steel production in the Q1 (January - March) of 2012 was 174 million tons, up by only 2.5% from the same period of 2011. During the first 10 days of April 2012, however, the production picked up to reach, on an annualized basis, 741 million tons, up by 7% compared to 2011. The recovery gave a hope to the global ferroalloy market, as the ups and downs in China's crude steel production directly affect the market. During the Q1 when the steel production was slow, producers of ferrosilicon, for example, continued curtailment on slow demand, but with the pick-up in steel production, the ferrosilicon market now expects a change to recovery worldwide, as the situation of ferrosilicon domestic market in China influences its export prices a lot. Investigation by customs on the roundabout trade at Chinese borders continues, prompting deals of export from Tianjin to secure timely shipments.

<> Ferrosilicon: As the investigation upon the borders progresses, Arrivals of the cargoes of roundabout trade contracted at attractively lower prices are delayed. The cargoes shipped through a third country have been mainly sold to rather small-scale consumers in Japan of, such as iron-castors and foundries, who are now looking for spot materials, or are trying to secure volume for spot consumption by urgently importing ferrosilicon from Tianjin stockyard. The price in an actual deal concluded most recently was US$1,440/ton CIF, more than US$60/ton higher than the ferrosilicon via a third country contracted in March. Tight situation of spot availability is forecasted to continue for a while.

<> Silico-manganese: The price raise by about 5% of manganese ore by major miners is to be applied to the shipments during May, but it has given so far apparently no influence over the market. Offers of Indian origin are in the range of US$1,280 - 1,290/ton CIF, already dipped below US$1,300/ton. Market views the price will hold the current level for a while, but some market participants feel the trend is weak. Compared with the low price level in January of below US$1,000/ton, the current level, up by US$300/ton or more, must be lucrative enough for the Indian shippers, allowing the price to take a short break after the quick rising trend in the past several months. This may mean that the 5% rise in price of manganese ore can be somehow absorbed within the rise of US$300/ton.

<> Charge chrome: The long and tough negotiation for the Q2 (April - June) of 2012 benchmark price ended last week (on April 25) when Japanese SUS mills agreed to a rise of US20/lb. It took the Japanese mills three more weeks to finalize the issue than the European mills who had needed 5 weeks from early March to reach an agreement to the US20/lb increase. It was a negoti-a-thon. Background of the longer negotiation time required by the Japanese mills was that the mills in Japan, as a neighbor to China where the SUS mills could lower their buying price of ferrochrome for April and Q2 to below US100/lb, had actually little room to simply accept the increase. In a sense the situation in Japan is more critical than in Europe where the SUS mills have been exposed to a fierce competition with the imported SUS products from China. The benchmark price system was introduced and has been maintained with the understanding that the system serves as mutual benefit for both smelters and mills, but the system's foundation seems shaken by the various changes in the market as time has gone by. One of the changes is the buyout of Inoxum, a stainless steel division of Thyssen-Krupp, by Outokumpu, Finland. The deal is to be completed within this year to form a mega-scale mill producing 7.5 million tons of stainless steel annually as well as ferrochrome in its own facilities.

<> Manganese metal: The intensified investigation by the Chinese customs on the roundabout trade continues. Since the traded volume of manganese metal of Chinese origin through a third country was as a matter of fact bigger than ferrosilicon, it is of market's interest how the impact of the investigation will spread within the Asian market especially in Korea that has been a major destination of the roundabout trade. In Japan also, shipments of the metal through the roundabout trade, earmarked to two steel mills that purchased the cargo on tender basis, are causing troubles in delivery. Unfortunately it is not common among distributors in Japan to keep some volume of the metal in stock for spot needs, delays in delivery is directly causing panicky reaction. However, the offer prices from China are keeping the same level at US$3,100/ton CIF, partly because demand for the metal from domestic sectors in China has been still weak as production of stainless steel has been stagnated.
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last modified : Tue 08 May, 2012 [10:34]
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