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|Japan Imported Ferroalloy Market Report - June 29, 2012|
|= Ferroalloy prices have been put unstable by weakened Indian Rupee and South African Rand =|
Summary of the current market situation of ferroalloys in Japan as of June 29 is as follows.|
Sluggish growth of China's crude steel production continues. Production during the first five months of 2012 was 296 million tons, up only 2.2% from the same period of 2011. Publicized Chinese statistics may, as some people say, differ a bit from actual production figures, as the government tends to intentionally use the statistics to appeal its strong growth potential in GDP. What is clear is that steel mills have been modestly holding off imports of raw materials since the beginning of 2012.
Apart from the situation in China, one of the current topics in the market of ferroalloys is depreciation of two local currencies of ferroalloy producing countries, i.e. Indian Rupee and South African Rand. Recent weakness of the currencies, against U.S. Dollars, has allowed the local ferroalloy producers to lower the prices of their products in US$ on export, and to expand production. A good example is the Indian silico-manganese, of which the offered price at this moment is US$1,170/ton CIF, down about 10% from May. Unfortunately there is no Indian producer of silico-manganese in leadership that sets proper price levels, therefore, once the price starts to decline, it tends to continuously slide until the level reaches the breakeven, and until the windfall merit from the currency goes away. At the moment, the breakeven is said to be US$1,100/ton CIF. In the meantime the price of manganese ore was raised three times this year so far, i.e. for the ores shipped in May, June and July, but it looks unlikely that price will rise again for the shipments in August. As a matter of fact, one of the South African miners already announced that it would keep the price for August shipments unchanged.
The price of Chinese ferrosilicon has been kept almost unchanged at US$1,400/ton CIF shipped from Tianjin, apparently because some of the major producers are in alliance to maintain the level. Nevertheless, there is a report that some sales were actually done probably by medium/small-scale producers at less than US$1,400/ton (shipment from Tianjin). This situation may change in the near future as the current capacity utilization rate in the major producing regions, Ningxia and Inner Mongolia, is said to be already close to 50% and this low-level output may continue during the coming months.
European Q3 (July -September) benchmark for South African charge chrome was agreed to cut US$0.10/lb Cr from the Q2's US$1.35/lb Cr despite the sellers' intention to at least roll it over. Background of the reduction must be that the market situation surrounding the European stainless steel industry further worsened on the mill's curtailment from weaker demand. On the other hand in such a gloomy situation for the South African charge chrome producers, the news that the South African government is mulling US$75/ton export tax for chrome ore is very encouraging. Restriction of any type to control chrome ore export from South Africa would increase the possibility to salvage the ailing South African ferrochrome smelters, as higher importing price of the ore for China would eventually raise the price of ferrochrome in China.
The price of manganese metal has been stably kept at US$3,100/ton CIF Japan. This price is based on imports through official trade channels from China since Japanese are basically compliance-oriented, showing little interest in the offers through so-called "roundabout trading", but things are a bit different in Korea, namely, the lowest price offered in a recent tender held by a major steel mill was US$2,700/ton CIF, for the metal imported apparently through the unofficial channel. So, current difference in price between Japan and Korea is more than 10%.
The level of price of molybdenum oxide in the recent offers from dealers further softened to reach very close to US$13/lb and it maintained US$13/lb last week. It was during the Q3 (July - September) of 2011 when the price fell to below US$13/lb last time. This weak trend is basically due to China's reduced interest in imports of molybdenum oxide, as China has increased domestic production capacity to meet its demand, besides the reduced demand of the material on stainless steel production curtailments. This trend highlights misreading of future demand on the part of the western-world molybdenum producers who have been trying to expand production to supply to China. Some of the expansion projects are already close to completion, but the producers are questioned whether they should delay start-up or go as scheduled.
|last modified : Thu 05 Jul, 2012 [10:38]|