TEX reported that spot price of high carbon ferrochrome in Europe is rising. This tendency is becoming clear from last week and, particularly, spot price of South African charge chrome has risen by 10 US cents to 110 US cents per pound of Cr on DDP base, having shrunken a differential between benchmark price and spot price.

Consequently, a differential between 120 US cents per pound of Cr for high carbon ferrochrome (containing 60% to 65% of Cr) and 110 US cents for charge chrome has shrunken to 10 US cents per pound of Cr. Spot price of high carbon ferrochrome in Europe had been maintained on a firm tone and the prices of this ferroalloy were in the range of 116 to 120 US cents per pound of Cr until December 2010.

Also, reflecting this firm tone of the price for high carbon ferrochrome in Europe, spot price of this ferroalloy in the USA has risen to a level of 130 US cents per pound of Cr ex warehouse. It is said that a dealer in the USA is offering high carbon ferrochrome at 140 US cents per pound of Cr ex warehouse. The producers to be able to supply high carbon ferrochrome with Cr content of 65% minimum have been restricted to Kazakhstan and Turkey and, therefore, price of this grade ferrochrome has inclined to rise.

Stainless steel companies of Europe implemented to reduce their stocks of ferrochrome in October to December quarter of 2010, having resulted in a reduction in new purchases of ferrochrome, and the market price of high carbon ferrochrome in Europe had weakened in October to December 2010 quarter. This aspect has caused to fall the benchmark price of South African charge chrome for shipments in January to March quarter of 2011.

However, spot price of high carbon ferrochrome (charge chrome) has turned to firm up from the beginning of January of 2011. The output of stainless steel in Europe in January to March quarter of 2011 is expected to increase. LME nickel price is still rising since spring of New Year and, in anticipation of a rise for prices of stainless steel products (to hedge high nickel price), the orders for stainless steel products are in the direction to increase.

Also, South Africa is the largest base in the world to produce ferrochrome but has held a potential problem of electric power. A bad weather attacked South Africa in this time has caused the troubles in transportation of coal and the capability to operate electric power generation plants has had a decline. Therefore, Eskom emphasized that a crisis in supply of electric power is forecasted to arise in March.

However, according to an opinion from producers of ferrochrome, the current situation on supply of electric power in South Africa is far from a seriousness experienced in spring of 2008 and it will be unlikely to see a reduction in production of charge chrome. However, South African producers, who had suffered from a fall of price for charge chrome in October to December quarter of 2010 caused by an oversupply of this ferroalloy, have currently restricted their production of charge chrome and attempted to rise the bottomed spot price of this ferroalloy. The parties concerned have a view that this effect is permeating into the market, and the reality seems to be wishing to rise the bottomed spot price of high carbon ferrochrome.

(Sourced from TEX Report Limited)