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Japan Ferroalloy Market Report - October 31, 2012
= It is worth noting that RMB is under pressure for further appreciation against US$ =
Market situation of ferroalloys in Japan as of October 31 is as follows.

<> Summary: Needless to say, changes in the exchange rate of local currencies of ferroalloy producing nations are very important to watch. The currencies, to make things more complicated, sometimes fluctuate independently from supply and demand situation. Recent trend of those currencies is, <> India: weaker Rupee, softening offer prices of Indian silicomanganese, <> South Africa: weaker Rand, allowing spot charge chrome prices in Europe and in China to further slide, and <> China: stronger Renminbi, caused especially by the remarks of Mr. Romney in his presidential campaign regarding China's intervention to currency markets. If Renminbi continues to appreciate, ferroalloy prices will most probably start rising.

<> Ferrosilicon: In China, domestic market is showing a sign of turnaround. There was reportedly a small rebound in the price by RMB100 - 150/ton last week, reflecting the tightened supplies from curtailments. With the slight upward trend, Chinese offers to Japan were a bit raised but buyers basically did not care and actual deals were done at even lower levels than before on thin spot demand. As to Russian materials, some offers were taken at a little higher level than for the Chinese origin.

<> Silicomanganese: As the Rupee got stronger after it had got weaker in early October, the price range of the offers from Indian producers became wider. However, buying interest in Japan was not very strong, keeping the prices of actual deals US$1,100/ton CIF Japan or a little less. It is said that some quantity was offered at even less, presumably from a shipper's own stocks, but market understood it was only a temporary move.

As to the Chinese origins, the domestic prices in China slightly rose mid-October without any further rise, keeping the offers for export basically unchanged without actual deals. The exports from China through third countries reportedly continue, despite the various measures to stop them taken by an association of the industry. Some of the detoured cargoes ended up at Japan,

<> Charge Chrome: There has been no news about the Q4 benchmark of which negotiations are scheduled to start one month away. The news that ESKOM, the power company in South Africa submitted an application for power price raise of annually 16% for the coming 5 years will serve, once it is approved, as a weapon for the sellers to raise the benchmark. Spot offers for a large shipping lot are at US$0.90 - 0.95/lb Cr, which can probably be discounted to below US$0.90/lb Cr if buyers are serious, but no Japanese mills seem ready to consider spot purchases as they are fully bound by the obligations under the long-term contracts.

<> Low-carbon Ferrochrome (C<0.1%): Price negotiations for the Q4 shipments will start in December. Some spot offers of Russian/Kazakh materials have been lowered to below US$2.00/lb Cr, reflecting the weak position of the imported materials against those from China and Japanese domestic producers who have been successful in making spot deals, but the level might not be enough to compete.

<> Molybdenum: Owing to the short-covering of merchants, the price recovered to US$12/lb in September for a short while, but it dipped again early October below US$11/lb, since when it had moved within a boxed range of US$10.80 - 11.00/lb. Last week there was a sign of pick-up, making the price (offers of dealers) slightly over US$11/lb, i.e. US$11.00 - 11.10/lb. Production of molybdenum oxide during the Q3 (July - September) of 2012 by major producers were basically down. Kennecott produced 25% less than in the Q2 and Antamina produced also less by 24%. Codelco's production has been less on year-on-year basis so far until the Q3 of 2012. Production by Freeport during the Q3 at Climax that started commercial production during the Q2 was almost unchanged from the Q2 at 1 million pounds, meaning Freeport controlled output. It is therefore unlikely that speculators will retry to sell short under these circumstances.

<> Silicon Metal: In China demand continued sluggish in domestic market from solar panel/automobile industries, and there seems no sign of demand increase from exporters, therefore some offers dipped, most probably for quick sales for cash, below US$2,000/ton CIF Japan, which soon disappeared, as the tightened supply from curtailment became visible. Current offer level is at US$2,100/ton CIF Japan on a little weak market atmosphere due to the seasonal factor that sellers in need for cash at the year-end usually start selling cheap soon.

<> Manganese Metal: Curtailment of stainless steel production in China continues and export demand has been dull. The current export taxes are under review and new tax rates for the year of 2013 are to be announced sometime during November, so buyers are not ready to enter price negotiations for January shipments yet. Likewise producers seem to be accumulating own stocks in expectation that the tax may be lowered, making supplies to the market a bit tight.

Expiry of the special favored power rates in Guangxi at end-October is also making the market sentiment firmer and prices reportedly rebounded last week, while the prices for export apparently stopped declining.
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last modified : Tue 06 Nov, 2012 [10:12]
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