Reuters reported that ferrochrome prices are expected to recover beginning in September 2011 from a decline in the third quarter as high energy costs lead to a reduction in supply and as stainless steel users start restocking material.

Traders said that the European contract price of high carbon ferrochrome fell USD 0.15 per pound to USD 1.20 per pound for the third quarter as demand from stainless steel makers has taken a dip.

A European ferrochrome trader said that "We definitely expect a pick up after the summer. Look at the Q3 price. Nobody wants to produce ferrochrome this month in South Africa with contract prices so low and energy prices so high. South Africa will cut back quite a lot."

The mining industry in South Africa has been struggling for some time with high energy costs and shortages, and workers in the energy sector are also threatening strikes over wages. Contract prices of ferrochrome were at USD 1.35 per pound for the second quarter and at USD 1.25 per pound for the first quarter of this year.

Stainless steel traders and end users have been destocking in the last few months on falling nickel prices, and many expect they will need to replenish the supply chain later this year, which should boost ferrochrome demand.

Spot prices for high carbon ferrochrome were at USD 1.15 to USD 1.25 per pound in European warehouses duty paid as compared with USD 1.30 to USD 1.40 per pound in March and April 2011. Spot low carbon ferrochrome was at USD 2.10 to USD 2.15 per pound from USD 2.30 to USD 2.40 per pound in May and June 2011.

(Sourced from www.reuters.com)