Reuters reported that spot prices for high carbon ferrochrome moved up this week on increased interest from traders, who bet higher nickel prices will boost demand for stainless steel.
Traders said that high carbon ferrochrome was at USD 1.20 to USD 1.30 per pound, up from USD 1.15 to USD 1.25 per pound last week. A UK based trader said that "Prices are starting to pick up as there are a lot more enquiries."
Ferrochrome is used for plating and to give a polished silvery coating to stainless steel used in buildings, washing machines and cutlery. European stainless mills calculate prices for their products by adding a monthly alloy surcharge to recoup the cost of the raw materials they buy. The nickel price is the largest component of that surcharge. When nickel prices are on the rise, stainless steel traders and end users tend to restock quickly before the monthly alloy surcharge comes into effect.
A second trader "Higher nickel prices encouraged restocking on the stainless steel side and traders has jumped in. Demand from end users hasn't moved up much yet but it's all sentiment driven."
Benchmark nickel prices on the London Metal Exchange rose to a session high of USD 24,725 per tonne, up by 15% from a 7 month low of USD 21,337 hit in late June 2011. Also lending support to ferrochrome prices, supply was affected by cutbacks at some South African producers, dogged by rising costs and lower sale prices.
The second trader said that "Discipline on the supply side is helping prices a bit but the effect of the cutbacks will be more evident later on and in September 2011."
The European quarterly 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 had taken a dip.
Traders expect prices will rise in the fourth quarter as high energy costs lead to a reduction in supply and as stainless steel users start restocking material.
Prices for low carbon ferrochrome were at USD 2.20 to USD 2.25 per pound a tonne, little changed from last week. A third trader said that "Low carbon has been very quiet. Earlier, it didn't go down as much as it should have."
(Sourced from www.reuters.com)
