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Prices Of FeCr In Europe Rise Further For Tightened Actual Cargoes

= Price Of High Carbon FeCr Has Risen To 105 US-Cents Per Lb. / Cr, Having Exceeded Benchmark Price

The market prices of ferro-chrome in Europe have risen further in last week and, in view of a scarcity of actual cargoes, the current prices on DDP base have risen to the levels of 95 - 105 US-Cents per lb. of Cr for high carbon ferro-chrome and of 180 - 190 US-Cents per lb. of Cr for low carbon ferro-chrome with carbon 0.1% max. respectively. Owing to the thinned stocks of ferro-chrome, many of stainless steel companies are asking to import ferro-chrome for shipments in August to September but the shippers concerned are now offering ferro-chrome at the risen prices as mentioned above.

For a reference, the benchmark price of South African charge chrome settled with European mills for shipments in July - September quarter of 2009 has risen by 20 US-Cents to 89 US-Cents per lb. of Cr on DDP base and, accordingly, spot price of high carbon ferro-chrome has largely exceeded this benchmark price.

This phenomenon, which prices of ferro-chrome in Europe have currently risen to a substantial extent, has overthrown radically a feeling of market prices for ferro-chrome so far led by the Chinese market. The reason is that, owing to a basic tone which the production of stainless steel in China has recovered from April of this year and turned to increase, price of Indian high carbon ferro-chrome (with Cr 58 - 60% and C 6 - 8%) to import into China has risen to a level of 80 - 84 US-Cents per lb. of Cr CIF from the beginning of this week and it is anticipated to rise further price of Indian product to a level of 90 US-Cents CIF within a short time.

The circumstances surrounding stainless steel in Europe have suddenly changed and this aspect has caused a steep rise of prices for ferro-chrome. Stainless steel companies in Europe have maintained the structure to reduce their production of stainless steel by 40% for a long period and, consequently, the supply situation of stainless steel products in Europe has suddenly tightened to a substantial extent. Therefore, European stainless steel mills have entirely changed their attitude for purchases of nickel and chrome as raw materials for production of stainless steel. In order to implement a reduction in production of stainless steel, European mills have been forced to practice layoff of many employees and, accordingly, are unable to revive so quickly their production of stainless steel as the mills in Asia have recovered promptly their production. The orders for stainless steel products have been already booked out in Europe up to shipments in November to December and the market situation of stainless steel in Europe has completely changed.

The total quantity of stainless steel produced by stainless steel companies in the EU (10 countries) for the first half (January - June) of 2009 is estimated at 2.62 million tons, corresponding to 57% of operation rate compared to that (4.56 million tons) produced in the same period of 2008. Therefore, the mills in Europe once reduced considerably their production of stainless steel by 43% of nominal capacity and an issue of this drastic cutback has suddenly come up to the surface with the tightened supply of stainless steel products. In view of the facts that nickel price has risen steeply (US$16,000 per ton at present) and prices of ferro-chrome have bottomed out and turned to rise (benchmark price of charge chrome has risen by 20 US-Cents), most of stockists have at once increased their purchases of such raw materials as nickel, chrome, and so on, causing to push up prices of raw materials.

The world output of primary nickel in 2009 is anticipated to be on a level of 1,200,000 tons by a decrease of 11% from that in 2008 but the production of ferro-chrome in South Africa for the first half of 2009 had a considerable decrease of 70 - 80% from that for the same period of 2008 (note : South Africa produced 3,280,000 tons of high carbon ferro-chrome in the calendar year of 2008) and the stocks of charge chrome at South African producers as of today have become scarce.