Upon review of ferrochrome supply and demand in Japan during the Q1 (January to March) of 2012, details of which are as per the table attached hereto, it is found that, compared to the Q1 of 2011, production of crude stainless steel was down 8.8% from 771,300 tonnes to 703,500 tonnes, although production of crude special steel in the same period was a little up 1.1% from 6.216 million tonnes to 6.282 million tonnes, consumption of high carbon ferrochrome substantially dropped 7.7% to 164,812 tonnes reflecting the curtailment in stainless steel production, consumption of low carbon ferrochrome increased by 4.4% to 11,723 tonnes.

It is also found that, due to the stainless steel production cut in order to deal with the stronger yen causing a sharp drop in exports, imports of high carbon ferrochrome dropped 3.9% to 157,373 tonnes, while those of low carbon ferrochrome also dropped 19.2% to 12,580 tonnes, which is mostly because consumers tried to minimize stocks before the end of the fiscal year.

As to the price of low carbon ferrochrome, basically no consumers tried to increase purchases during the Q1 2012 in preparation for the possible price increase for the shipments in the Q2. As a matter of fact however, Russian and Kazakh producers raised their prices of low carbon ferrochrome for shipments during April to June 2012 by USD 0.10 per pound for C<0.1%.

Source - TEX Report Limited

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