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Prices Of Ferro-Chrome In Europe Have Risen Further
= High Carbon Price Has Risen To Higher Level Than US$3 / Lb., Low Carbon Price Has Come To US$4.50
The market prices of ferro-chrome in Europe have risen further from last week. As a matter of fact, the market prices of ferro-chrome have come to US$3.10 per lb. of Cr for high carbon ferro-chrome and US$4.30 - 4.50 per lb. of Cr for low carbon ferro-chrome with carbon 0.1% max. grade. The transactions on ferro-chrome concluded recently in Europe are mainly for small lots purchased by special steel mills and it is not clear yet how do stainless steel companies, as major consumers of ferro-chrome, move on their purchases of ferro-chrome.

The market prices of ferro-chrome prevailed in the middle of February were on a level of US$2 per lb. of Cr for high carbon ferro-chrome and also on a level of US$3 per lb. of Cr for low carbon ferro-chrome respectively but, under the present situation as it has passed one month since then, the market prices of ferro-chrome have risen further as mentioned above and it is difficult to draw a future map of prices for ferro-chrome.

On the other hand, as regards South African charge chrome which stainless steel mills purchase with large quantities, the market price of this ferro-alloy in Europe has been materialized at US$2.10 per lb. of Cr, which is much higher than the benchmark price of US$1.29. The factor, having pushed up the market price of South African charge chrome in Europe, is certainly an anxiety for a decrease in production of charge chrome caused by a shortage of electric power in South Africa suddenly emerged from the end January of 2008. An initial explosive, having risen steeply price of low carbon ferro-chrome, is an accident occurred on the 18th of February at Samancor Chrome of South Africa in the process of producing IC-3 grade ferro-chrome (medium carbon material ).

Reflecting a favorable tone on automobile production, the production of special steels at mills has been maintained on a high level and the circumstances at special steel mills have considerably differed from those at stainless steel mills, in which a 65% of production costs has been shared by prices of nickel and chrome as raw materials. Accordingly, even purchases of ferro-chrome with small lots have been concluded at higher prices in many cases. Also, in expectation of higher prices of ferro-chrome for the near future, some of trading companies have entered into the market to speculate in ferro-chrome after a long interval, having stimulated to push up further prices of ferro-chrome.

The matter in question is the indexation applied to prices of ferro-chrome as raw materials to be used to produce chrome-based stainless steel and chrome-based special steel, which are ordered for exports in forward shipments (also for deliveries to domestic market in future times ). Namely, if a substantial differential between spot price and benchmark price comes up, a confusion may come up in the market of ferro-chrome. Many of steel mills have taken in the indexation for benchmark price of ferro-chrome and, when the free market prices of ferro-chrome are maintained on higher levels for a long period, a possibility to be unable cover the realities of higher costs for raw materials may arise. After all, in case that benchmark price of ferro-chrome is restrained on a lower level, an anxiety to enlarge a difference against real cost will arise.

Therefore, even if it is inevitable to revise the benchmark price of South African charge chrome for shipments in April - June quarter of 2008, a level of this revision has to be a nearer level to the free market price. This view is now spreading over the market of ferro-chrome. A possibility to rise the benchmark price of South African charge chrome to a higher level than US$2 per lb. of Cr for shipments in April - June quarter is enlarging further in comparison with that as of February.

At present, it is not known yet about on which scale is the production of ferro-chrome in South Africa for the year of 2008 settled down. The platinum industry of South Africa negotiated with Eskom on the volumes of electric power to be supplied to than in 2008 and, consequently, this matter has been settled by a reduction of 5% but the gold industry is still negotiating with Eskom on their requirements of 100% supply. A result of the negotiation with Eskom by the chrome industry is not clear yet. When Eskom will supply electric power for the chrome industry with 85% of the requirements, South African plants are anticipated to produce 2,800,000 tons per annum of ferro-chrome in 2008, decreasing by 500,000 tons compared with that (3,300,000 tons ) produced in 2007.
last modified : Mon 17 Mar, 2008 [10:48]