Market outlook in Japan of the imported ferroalloys as of January 16th 2012 is as follows:

General view
The year of 2012 started under the sluggish world economy that was forecasted to linger around for some more time than expected. Actually, the monetary and financial crisis in Europe is, as forecasted, dragging on. The locomotive of the world economy, China had slowed down especially in exports already last year failing to achieve an annual export growth rate of 20%, so the government is expected to further loosen monetary control. Under these circumstances, the metal markets as represented by the London Metal Exchange do not seem to have regained energy to healthily grow yet. Most probably the first half of this year will be a runway, a kind of preparation, for a take off in the second half, when China will hopefully recover the strength for the growth to lead the world economy based on the ever growing and potential power for consumption.

Ferrosilicon
Production cutbacks which started in November 2011 and still going on mainly within the so called Silicon Land (Inner Mongolia, Ninxia and Qinghai provinces) have been so drastic, down by 80% in November 2011 as compared to the area's production in October 2011, that those major producers were understood to be very serious about sweeping away surplus materials in stocks. However, as a matter of fact, the producers do need to raise cash before the New Year Holidays and some of them are seemingly prepared to sell cheap, at USD 1,400 per tonne CIF or even less rather than trying to maintain the price level higher. This basically means it will take some more time before the market price will hit the bottom. It is a big concern of the market whether situation will change after the Holidays, and, if so, to which direction it will go.

Silicomanganese
The mood in the market that it bottomed out already last month was lingering over to the New Year, but the difficulties the Indian silicomanganese shippers were facing have not disappeared. The weaker Euro since late December requires the shippers to review, if possible, their export offers to Europe, while the European local producers have gained competitiveness thanks to the weaker currency. Actually the price of the Indian offers has gone up in Japan, based on a little stronger Rupee, to USD 1,030 to 1,040 per tonne CIF, but no actual deals have been reported at the this level, as the demand is still weak. It is true that there were some low offers of below USD 1,000 per tonne CIF last week, which disappeared before the weekend,

Charge chrome
With the price rebound in China in December 2011, the market atmosphere changed drastically. This change naturally affected the world market to ferment a mood of hope across the board. The most recent price in China was CNY 7,950 per tonne including VAT, equivalent to USD 96 to USD 98 per pound for charge chrome of 50% Cr, an increase of several U.S. cents compared to the prices in December. Meanwhile, Jindal, a major Indian stainless steel mill, changed its procurement policy of ferrochrome from the captively produced material to the imported charge chrome. This explains that ferrochrome smelting operation in India by buying chrome ores from third party sources is not anymore profitable, i.e. importing ferrochrome is lower in cost. Under these circumstances, more and more market participants, mostly the producers forecast a price rise in the Q2 benchmark by USD 10 to USD 15 per pound.

Manganese metal
Since late December to the New Year, cheap selling for raising cash has prevailed in the market and it aggravated the situation, although it is in a sense understandable that the manganese producers in China who are mostly in small scale operations are obliged to become cheap sellers for exports to improve the year end cash flow. The offer prices to Japan have become lower by some USD 100 per tonne to USD 3,100 to 3,200 per tonne CIF, but there have been very few interests even in the lowered level and no deals. As the current level of price is thought to be tough for the producers to stay profitable, it is observed/hoped that the market will rebound after the Chinese New Year Holidays.

Silicon metal
Production in China has been lower due to the dry season, so there has been little pressure from the supply side. The offered price for 5.5.3 grade to Japan has got a little lower at USD 2,400 per tonne without any further downside pressure. The demand in China has not recovered its strength yet and the cutback in the dry season has not served as an effective factor for the market to somehow recover.

(Sourced from TEX Report Limited)