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Update on outlook of chromium metal market by Delachaux
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Saturday, 17 Nov 2012
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Mr Yoran Guenegou sales and marketing engineer of Delachaux in France, visiting Japan had an interview with pressman Mr Saito on November 6th 2012 in Tokyo. The company is specialized in producing chromium metal especially of high purity for super alloys used by such industries as aircraft, gas turbine and nuclear power plant.

In answering to questions by pressman, Mr Guenegou explained about the outlook of the world market of chromium metal, including the super alloys, and the unstable supply situation of chromium oxide, the raw material, of which contents are summarized here below.

While the demand for steel including stainless steel has been soft worldwide due to the world economy downturn, the demand for chromium metal has been solid as an exception and it is considered the demand will firmly grow in the future.

World production of chromium metal in 2011 was 41,000 tonnes, of which Delachaux produced 9,000 tonnes. This year, Delachaux plans to produce 9,800 tonnes, the record high production by the company, and the world production will become 43,000 tonnes reflecting solid demand.

The company is capable of producing 12,000 tonnes per year consisting of four kinds of products, i.e. DDB, vacuum grade, air melt grade and powder. Production volume varies with the product-mix of the four. Delachaux's production has been limited over a few months in the past because of a lack of availability of chrome oxide metallurgical grade, but as the situation of chromium oxide supply improves from the increased capacity of supply in the USA and Kazakhstan, it should be able to produce 12,000 tonnes annually on the enough raw material availability.

The market situation of the metal during the first half (January to June) of 2012 was tight thanks to the strong demand from super alloy sectors, who tightened the market even more by purchasing more than they needed for safety, raising the price. On the contrary in the second half (July to December) of 2012, the situation became loose as the uncertainty of world economy's future grew, making consumers start reducing stocks in late summer. Reacting to a possibility of further stock reducing action of the consumers before the budget year end and the calendar year end, Delachaux reduced output volume. To make the matter worse, those metal producers in Russia and China, most of which are spot sellers, cut their prices as the market softened making the market sentiment even weaker. The fact that one of the two Russian metal producers increased its production capacity and that China accelerated exports on sluggish demand from domestic consumers was another reason.

Current price level is probably at the bottom, although the level may continue through to the Q1 (January to March) of 2013. It will however pick up if the market improves, or if the situation of Novotroitsk Plant of Chromium Compounds, Russia, who faces a heavy USD 60 million fine for non compliance to environmental regulations, deteriorates, forcing them to reduce output, making the market tighter.

Supply of chromium oxide was tight during the first half of 2012. The oxide suppliers to Delachaux were at their full capacity. On the contrary in the second half, the supply has been enough to us, despite the lowered capacity utilization rate at the oxide producers mainly because of the weakened demand from chrome oxide pigment, ceramics sectors, for chromic acid, and surplus in supplying capacity from China due to the reduced demand from construction and automotive sectors in China on the slowed economy. Although Delachaux has secured enough supply of the raw materials from stable supply sources in the USA and Kazakhstan, it is necessary to be always on the alert for constant and enough supplies in the future, as the market of chromium oxide is vulnerable to fluctuation in demands from non-metallurgical sectors such as construction.

In 2013, Delachaux plans to slightly increase production output against an increase in world demand to 44,000 to 45,000 tonnes, two thirds of which will be for super alloys with the balance for additive agent to aluminum, welding rod and so on. Delachaux expects good increase in sales for aerospace superalloys, as well as for industrial gas turbine manufacturing and nuclear power plants.

Source - TEX Report Limited


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