Reuters reported that the European contract price of high carbon ferrochrome is set to fall in the Q3 as demand from stainless steel makers took a dip in the last few months.

Contract prices of ferrochrome FECRO-HC-RU rose to USD 1.35 per lb in the Q2 from USD 1.25 per lb in the Q1 this year and are now set to fall by 0.10 per lb to 0.15 per lb in the third quarter.

A ferrochrome trader said that “This is purely due to terrible demand from the stainless steel sector. Outokumpu is in the red, Acerinox is running at 40% to 50% of capacity they are consuming less ferrochrome so prices will fall at least by 0.15 per lb.”

Trader said that “There is little demand for ferrochrome and high stocks. Producers are struggling with costs but customers insist that prices should go down.”

South African ferrochrome producers were heavily affected by increasing energy costs and a strong South African rand against the dollar has made things worse.

Citibank said that most producers are back to 2009 levels of profitability. At USD 1 per lb we calculate that South African producers would be EBITDA negative. The bull argument of cost push is looking to become cost support at this stage.

In order to push the market into balance again some ferrochrome producers have announced production cuts for the second part of this year. This is a good sign as it shows industry discipline and should help support prices

(Sourced from Reuters)