Outlook For Chrome Metal Market By Delachaux / France = High Quality Product, Chrome Demand Is Stable Mr. Yves Zordan, Sales and Marketing Manager of Delachaux in France, came to Japan and had an interview with our pressman ( Mr. H. Saitoh ) on the 13th of November at the Head Office of Sumitomo Corporation in Tokyo, which is the agent in Japan for sales of chrome metal produced by Delachaux. At this meeting,, in form of answering to the questions placed by our pressman, Zordan Manager commented on current market of chrome metal and an outlook for its future movements, and the contents are as follows ;
(1)A core of the demand for high quality chrome metal is the 3 industries of aerospace, gas-turbine and IGT ( industrial gas-turbine ) and oil & gas research. The economic activities at these 3 industries have been running on a favorable tone. However, in the superalloys industry which has been supplying materials to the consuming industries, owing to the restriction of facilities, the quantity of chrome metal to be consumed as raw material in 2007 is anticipated to have only a slight increase. It is estimated that the world consumption of chrome metal in 2007 will be 30,000 - 31,000 tons on an annualized base ( not including Russia and China ).
The world consumption of chrome metal in the last 4 years reached the bottom in 2003 and, after that, turned to recover gradually with the following steady increases ; <> 2004 : 25,000 tons, <> 2005 : 28,000 tons and <> 2006 : 30,000 tons. However, the world demand for chrome metal has come to a slight increase at present. In the superalloys industry, only 1 -2 companies had strengthened the capacity ( vacuum furnace for melting ) in 2007 and even the active operations at end-users have been walled at the stage to expand production of superalloys.
(2) The 3 industries as mentioned above are end-users and, although the deliveries of large aeroplane A380 to be manufactured by Airbus Industries are delaying, the aerospace industry has basically maintained favorable operations. In view of many orders for aeroplanes to be delivered in forward times, as far as the disaster emerged on the 11th of September does not arise again, the aerospace industry is thought to be able to maintain the production on a high level. Reflecting a steep rise of oil price, the demand for oil pipes from oil-gas industry has continued to be vivid. The demand for high quality chrome metal from IGT industry has also trended to increase.
(3) How to secure chrome oxide as raw material is a technical or critical matter. An anticipation of chrome oxide is opaque. As a leading producer of chrome metal, Delachaux has been highly interested in the 3 points of (3-1) how to secure chrome oxide as raw material., (3-2) how extent does the cost for production of chrome metal raise for a sharp rise of price for raw material., and (3-3) how high does price of chrome ore rise. Owing to the environmental problems, an instability on supply of chrome oxide or chrome chemicals has been deepening year by year. The countries, producing chrome chemicals, are in the direction to decrease and have been now concentrated on the 4 countries of UK, China, Kazakhstan and Russia. Only the country to produce chrome chemicals in the western world is UK. The hardness to secure raw material will be influenced. In addition to a change of the composition in the industry of chrome chemicals, price of chrome ore in the international market has risen to a considerable extent, having multiplied this severe situation of raw material. In spite of the fact that price of chrome oxide as raw material has risen, the present situation is hard to pass on fully an increase of production cost to price of chrome metal.
(4) China had once put a substantial influence on the international market of chrome metal but has shown a remarkable change of their position from 2007, because China suddenly decreased their exports of chrome metal to a large extent. In order to put the brake on exports of Chinese chrome metal. the Central Government of China has enforced the regulations for exports of chrome metal, consisting of (4-1) decided in November of 2006 to impose 15% of export duty, (4-2) prohibited conversion trade on consignment, effective from November of 2006., and so on. Also, a steep rise of price for chrome oxide as raw material to purchase has caused to push up the cost for production of chrome metal in China and, accordingly, a power to be competitive in the international market has weakened at Chinese side. Also, as regards Chinese chrome metal, in anticipation of the matter that price of chrome metal will rise soon for a higher price of raw material ( chrome oxide ), the consumers concerned had increased in advance their purchases of chrome metal in 2006 and the floating cargoes of chrome metal were progressively digested. Chinese chrome metal once retreated from the export market but, depending on a further change of the situation, has held a possibility to revive in export business and, therefore, it is necessary to watch carefully about further movements of Chinese chrome metal.
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