ferro chrome prices

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Steelmakers, suppliers locked in Q4 chrome talks
Stainless steel mills and ferro-chrome suppliers are still locked in talks for fourth-quarter chrome contracts going into mid-October, buyers and sellers said.

Suppliers, led by South African majors Xstrata and Samancor, are seeking an increase of 3 cents per lb, which would take prices to around 78 cents, near the peak in the second quarter of last year.

Stainless steel producers in Europe such as Arcelor Mittal, ThyssenKrupp and Corus say stainless markets are strong, but are reluctant to agree to what would be the third consecutive quarterly rise.

"The producers have the strength to push through (an increase of) three, but there's a lot of resistance," a buyer at a stainless firm said.

Reluctance to agree to an increase may indicate steelmakers are not confident demand for their product next year will be as strong as in 2006, and do not want to part with cash if their own sales prices may soon fall.

Talks have been strained, and reports circulating that prices have been settled have only aggravated matters.

If the producers maintain a united front they could force through a 3 cent rise, but it would not be a popular move, the buyer said.

"It will cause bad feeling.

"All the arguments they used (in the past) we accepted, but now the arguments are on our side," he said, referring to the weakening South African rand.

The rand hit a 3-1/4-year low of 7,98 to the dollar last weak, against around 6 in the second quarter of 2005, when ferro-chrome prices peaked.

South African ferro-chrome producers pay local costs in rand but sell their goods for dollars, so when the rand is strong their foreign currency earnings buy fewer rand.

A ferro-chrome suppier earlier said that some deals had been inked at 3 cents up, with some yet to be signed.

"It's not clear at all at the moment," he said.

Another said a 3 cent rise was on table, but deals had yet to be confirmed.

This quarter's talks are proving longer and more difficult than usual.

Normally, a likely figure is circulated in the market well ahead of formal talks, and contracts are generally signed either at or very near that number.

Ferro-chrome producers and their customers are due to meet at an industry conference in Istanbul next week, at which contracts may well be signed.

Thought some may find it an interesting read, regards The Tinhopper.