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Japan Imported Ferroalloy Market Report - May 15, 2012
= Mn-group ferroalloy market is tested by low ore output and ore price rises =
Market outlook of the imported ferroalloys in Japan as of May 15, 2012 is as follows:

<> General view: Manganese ore output from major miners during the Q1 (January - March) of 2012 was down by 12% compared to the preceding quarter, and down by 17% compared to the Q3 (July - September) of 2011 when it was at peak in the year, mainly due to the heavy rainfall and transportation troubles at the mines of three major miners. And the low ore output apparently encouraged the miners to raise ore prices, for the first time in two years, for shipments during May and June by 8.4% in total. These factors are stimulating manganese-group ferroalloys' prices in international market places including in China to gradually soar.

<> Ferrosilicon: The roundabout exports from China through Vietnam and Taiwan, having been a disturbing factor since last year, now appear to be difficult to exist due to the much stricter control upon export at customs. Some producers/exporters were optimistic saying the stricter control would be only temporary, but actual situation is definitely changing. In response to the authority's pressure, several major Chinese ferrosilicon producers had a meeting in Tianjin last week to reconfirm orderly exports duly observing the laws. Based on the these moves in the market, spot availability of Chinese ferrosilicon has become much thinner due to delays/cancellation of the cargoes contracted through the roundabount trades, making current prices of ferrosilicon of Chinese origin in actual deals US$1,440 - 1,450/ton CIF, up by at least US$60/ton compared to the materials through the roundabout trade cheaply offered at US$1,350 - 1,380/ton CIF in February/March.

<> Silico-manganese: The ore price rises have been reflected to the rise in price of silico-manganese by RMB100/ton (= US$15/ton) in China. It is therefore a matter of concern among market participants in Japan how much of price will be offered for the silico-manganese of Indian origin in fresh offers. In India, ferroalloy smelters mostly in Andhra Pradesh state decided this month to change their mind to accept a power rate rise proposed already in April by the government, on condition that no additional rise would be enforced. The power rate rise in India together with the ore price rises for May and June shipments are definitely price-raising factors for the Indian shippers, generating a sentiment in the market that it will be difficult to expect offers below US$1,300/ton CIF, up by US$20 - 30/ton from the price levels of end-April.

<> Charge chrome: Market watchers are concerned about the Q3 (July - September) benchmark, which basically has not changed from the Q2 benchmark these years because European stainless steel mills cut output in summer, meaning less demand for ferrochrome. A European mill is reportedly floating a trial balloon saying that the Q2 benchmark will be rolled over to the Q3. Another concern of the market is the price at which Chinese mills buy ferrochrome on monthly basis. One of the Chinese mills is said to have raised its purchasing price for May deliveries by RMB150/ton, meaning a turnaround from their tough attitude in the past months, although the differential from the prices in Europe is still substantially large. For refernce, the power price rise is becoming to prevail the world, i.e. not only in India but also in Taiwan, South Africa, and Brazil, so far.

<> Manganese metal: Unlike the ferrosilicon producers in China, the producers of manganese metal look slower in reaction, probably because the producers are mostly small-scale ones and located in southern China. In addition, it appears still possible to secure tonnage exported from China through Vietnam and then through Korea. Market recognizes the risk of intensified border control, but actual risk seems to have been significantly smaller than with ferrosilicon. Nevertheless the price in Europe is showing a slight up trend, while the offers from Chinese shippers for shipments to Japan were up by US$50/ton to US$3,150/ton CIF. Market concern is focused on how much the intensified border control on exports from China will affect the market.

<> Silicon metal: In China, after the producers' efforts to raise the price when dry season came turned out unsuccessful, and now as the rainy season comes when power supply situation eases, producers are ready to increase output. Market forecasts therefore that the price will decline toward summer on softened supply/demand situation, but current prices are still unchanged ranging US$2,380 - 2,400/ton CIF, which are not however, as a matter of fact, so attractive for the Chinese exporters due to the high export tax to aggressively pursue exports.

<> Molybdenum: Dealers' offers dipped below US$14/lb again since 3 months ago, reflecting (i) the increase in mining production in the western world during the Q1 (January - March) of 2012 up by 13.3% from the Q4 of 2011 and up by 7.8% from the Q1 of 2011, and (ii) slow imports by China during the Q1. In Japan there have been not many spot deals, as major buyers have no room for spot purchases beside the quantities under long-term contracts. It looks unlikely that spot prices will go up in the near future under the pressure of the increased mining output.
last modified : Mon 21 May, 2012 [10:18]
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