TEX reported that market in December 2011 continued to weaken following the two previous months and is unlikely to recover lively atmosphere this month either.
In early November 2011, major stainless mills declared large price cut, which gave the market strong sentiments that the price would possibly go further down. Some of the market participants seemingly expected the price to go up, resulted from forced curtailment in the South due to higher power rates in the dry season, but the price hardly picked up and, rather continued to slide. The reasons of the continued weakness are, lower production of stainless steel on the lower demand derived from the price drop of steel products, making the demand for ferrochrome less, more imports and the accumulation in inventory of chrome ore, which softened the ore prices.
Although this month started with fresh encouraging factors for ferroalloy industry such as reserve deposit rate was lowered, and price of power generated by coal fired thermal power plants was raised etc, there has been basically no ferroalloy items whose price noticeably rose so far. High carbon ferrochrome is no exception, and its price made a further step down when December started. Background is that TISCO announced to again lower its December purchasing price to even below the current market prices.
Not all of the stainless steel mills have announced their December prices yet, the price level already announced so far was mostly lower than November prices by CNY 200 to CNY 300 per tonne. According to local Chinese media, ferrochrome producers/suppliers were hesitant over entering into contracts at the given low prices, lower than the market. Under such circumstances, TISCO declared last month end its December price at CNY 7,000 per tonne (for unknown quantity, with tax prepaid, delivered to the plant and payment by cash), substantially below the price level then prevailing.
TISCO just recently recorded its daily highest output of crude stainless steel, 7,622 tonnes in a day during November. Output in the month of November was also high at 228,600 tonnes. The company is the biggest stainless steel producer in China and also the biggest consumer of ferrochrome in China, meaning that its declared price at fairly lower level than in the market shocked the market participants, as it implies further price drops.
Recent price movement of high carbon ferrochrome (Cr: 55%, C<10%) for domestic destinations was, CNY 8,000 to CNY 8,100 per tonne on November 9th 2011, CNY 7,800 to CNY 7,900 per tonne on November 16th 2011, CNY 7,800 to CNY 7,900 per tonne on November 25th 2011, CNY 7,700 to CNY 7,800 per tonne on December 2nd 2011 and CNY 7,600 to CNY 7,700 per tonne on December 7th 2011 (in Tianjin market). There were days of apparent stop in decline but the downtrend did continue when December started.
(Sourced from TEX Report Limited)
