Save
Print[Ferro-Alloys.com]The second-quarter South African benchmark pricing decision had impeccable timing once again. The new European price, prediscounts, as set by Xstrata, is $1.27 up from $1.125 in the first quarter, or an increase of 13%. The increase was not based on better demand, but on the South African producers wanting to play hardball with European buyers. “The South Africans basically said they don’t have any more ferrochrome after selling their power,” one mill buyer said. “The pipeline is nearly empty. And, the smelters said they wouldn’t turn on their furnaces when the buyback program ends on June 1 unless they get a higher price.” The country’s second-tier producers are operating at less than 50% and everyone is relying on ore sales to keep afloat. The problem is that European stainless mills are facing their own financial problems in the second quarter, and they say they can’t afford higher raw material costs. “It’s nice the South Africans got a 13% increase, but our stainless isn’t moving and our buyers are balking at paying more for anything.” The mills quickly pointed out that not only is the rand sinking against the US dollar which should boost the smelters’ bottom line, but the euro is sinking against the US dollar, which makes ferrochrome even more expensive for them. “A 13% increase in the price is on top of a 7% drop in the euro against the dollar,” the buyer pointed out. “We can’t afford that.” And, it appears to be a localized problem in Europe. With the South Africans pushing more ore into the Chinese market, the volume of chrome units keeps increasing while South Africa’s own ferrochrome production is falling. “Despite the Eskom-related smelter cutbacks, the amount of total chrome units increased this year,” one miner admitted. The surplus of chrome ore coupled with less Chinese demand triggered a drop in April Chinese FeCr prices. JISCO took the lead by reducing its April tender price at 7,000 yuan per mt (86.8￠ per lb, VAT unpaid, ddp), down from 7,450 yuan per mt (92.4￠ per lb) in March. The mill halved its ferrochrome intake to around 10,000 mt from 20,000 mt in March. Industry sources believe ferrochrome stocks are higher and the domestic stainless demand is falling. TISCO also cut its tender price for April to 7,000 yuan (86.8￠), from 7,350 yuan in March. The tender amount is reported to be around 30,000-40,000 mt. China’s imports of high-carbon ferrochrome were down sharply in February, but sources say that this is mainly because of the week-long public holiday for the Chinese New Year, and many players were away for two weeks. China imported 131,544 mt of high-carbon ferrochrome in February vs. 217,594 mt in January and 141,570 mt in February 2012. The Japanese mills said they can’t afford a higher benchmark price because they are competing against Chinese stainless mills.
Copyright © 2013 Ferro-Alloys.Com. All Rights Reserved. Without permission, any unit and individual shall not copy or reprint!
- [Editor:editor]
Daily News
Research
Magazine
Company Database
Customized Database
Conferences
Advertisement
Trade
Tell Us What You Think