Reuters reported that benchmark ferrochrome prices on the European spot market have jumped to their highest in more than two years on strong demand for the material valued for its anti corrosive properties.

High carbon ferrochrome FECRO HC RU is trading at around USD 1.35 a pound in February 2011 from USD 1.20 a pound in January 2011. Current levels for the material used to make steel are the highest since November 2008 when prices crashed as financial and commodity markets tried to price in a deep, prolonged recession.

A Europe based trader said that "Trend is up, initial indications for second quarter ferrochrome price contracts settlement are for USD 1.35, but I have my doubts. Not sure, producers will be able to carry it off."

Traders said that ferrochrome prices are rising in major steel producing centers such as the United States, the world's largest economy, Europe and top producer China.

A London based trader said that "Some spot deals I've seen have been at USD 1.40. Demand seems to be much, much stronger everywhere."

Analysts said that high carbon ferrochrome prices are above 130 cents a pound with some higher grades now over 140 cents a pound.

Credit Suisse said in a recent note that prices in China have ticked up steadily since the middle of December and are now reported at 110 cents a pound. It added that "This bodes well for the second quarter contracts, likely to be announced in late March. We expect ferrochrome prices to rise from the second quarter and forecast an average price in 2011 of 140 cents a pound."

"Industrial production momentum is accelerating and we expect steel production to rebound in 2011."

Metals prices have a strong correlation with industrial production and manufacturing data. Expectations of tight power supplies in South Africa, a major producer of ferrochrome are also said to be have helped boosted prices.

(Sourced from www.reuters.com)