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Japan Ferroalloy Market Report - August 31, 2012
= Imported low-carbon ferrochrome price falls =
Summary of the market situation of ferroalloys in Japan as of August 31 is as follows.

<> Silico-manganese: The Indian suppliers seem trying to firm up the market by jointly setting up a price guideline, but buyers are hardly showing appetite, expecting instead that such a kind of plot will soon become void as similar plans all did in the past. It is said that there was an offer recently of Indian material at US$1,025/ton CIF to a Korean steel mill, while the offers to Japanese buyers are US$1,060 – 1,080/ton CIF, which is at least US$50/ton lower than the price of end-July. Now that the end of vacation season is coming closer with a sign of interest in fresh purchases from European buyers, the Indians are apparently hoping the market to revive fairly quickly.

<> Silicon Metal: Offers for 5.5.3 grade are at US$2,100/ton CIF in a gradual downward trend. Market is concerned about the results of the tenders that aluminum alloy producers in Japan are to hold early September for the Q4 (October – December) purchases. Given the automobile manufacturers are showing good interest in the lower-cost imported aluminum alloys, Japanese alloy producers will try to cut costs of the raw materials including silicon metal in order to stay competitive. The price of Chinese silicon metal is softening on the increased supply in summer this year as power shortage problem was settled when the rainy season came as usual, while last summer was an exception when silicon metal production stayed low due to the low precipitation, keeping the price of the metal at a fairly high level.

<> Manganese Metal: Chinese metal price continues to decline to the most recent level at US$2,550 – 2,600/ton CIF, which is comparable to the low level recorded in spring of 2009. The reasons of this low price level are (i) low nickel price, (ii) competition with the special grade (refined) ferromanganese, and (iii) lower demand for exports from China. Breakeven point for medium/small-scale producers is said to be more than US$2,900/ton, so it is probably a matter of time before the price picks up from further production cut and self-sustaining recovery.

<> Charge Chrome: It is a bit early to comment about the outlook of the Q4 (October – December) benchmark negotiations in Europe, but weakness governs the market sentiment, as the gap between the current spot price and the ongoing benchmark price level is widening. Cannot the producers avoid another cut for the Q4? The buyback agreement with ESKOM terminated at the end of May without extension based on the forecast that the power supply in winter would be enough. As a matter of fact, most of the ferrochrome producers are suffering from tightened cash flow after the power buyback agreement in which they were obliged to keep the furnaces offline, and planning to resume operations as soon as the winter power premiums are lifted. This will be a pressure to the market as an increase in supply, while the price of Indian ferrochrome dipped to US$0.89/lb in China. Market situation does not seem to be favoring the benchmark and the ferroalloy producers.

<> Low-carbon Ferrochrome: Price negotiations for the Q4 (October – December) with regular buyers are scheduled to formally start early September, but, actually, preliminary talks already started with major special steel producers (including stainless steel mills). Offers for the imported C<0.1% material, September/October shipment, are mostly in the range of US$2.06 – 2.09/lb, down by US$0.05 – 0.06/lb from the level offered during the Q3 (July – September). It is considered that actual Q4 deals will be done at more or less the offered level. Domestic material seems to be offered at a little lower level than for the imported materials so that deals are safely secured.

<> Molybdenum: The price of molybdenum oxide rebounded, after the two months of sharp drops, from the bottom at US$10.90/lb recorded early August (down 22% from the beginning of this year) to about US$12/lb, and is currently hovering there without a big hope in the market for further quick rise because there is almost no possibility of quick rise in demand, as seen in 2009 when China imported quite a lot of molybdenum oxide. Market participants will be probably, and realistically, more than happy if the price keeps US$13's for the months to come. As to ferromolybdenum, there seems a firm support for the price as the producers have been on summer vacation.
last modified : Thu 06 Sep, 2012 [16:34]
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