Delegates attending the recent International Chromium Development Association conference in Paris have agreed that ferrochromium prices will remain strong in the third quarter of 2008, backed by strong demand and tight supplies from South Africa.

Bullish market players, including sources at major producers, pegged the third quarter’s charge chrome contract prices at USD 2.20 to USD 2.50 per pound. Very few stainless steel mills are reducing their orders for the third quarter and reports of two major Chinese producers cutting production are not being taken seriously.

However, some market players cautioned that, while demand remains good, it is not sufficiently strong to override concerns about the high price of both nickel and ferrochromium. Consumers could limit their buying in the third quarter, making a rollover in prices more likely.

Stainless steel buyers, especially in Europe, are already baulking at the rising costs of stainless, sparking concerns over just how resilient the stainless steel market is. However, while volatile chromium prices pose a threat to the stainless steel market, it is the continuing volatility in the nickel price that is the real problem.

If the nickel price were to stabilize around USD 20,000 per tonne stainless producers would be tempted back into producing austenitic grades of stainless steel which would help to cap ferrochromium prices.

(Sourced from Metal Bulletin)