Executive Interviews

Asian Metal: Thanks for joining our interview Lars, please introduce your company briefly.

Mr. Lars: Metal Partner Germany is a private owned company founded in 1992 when we started trading business of several ferroalloys including FeTi, FeMo etc. In the middle of 1990s, we had a first exclusive marketing copperation with a ferrochrome producer, so after that we focus more and more on ferrochrome trading business. We do all grades of ferrochrome from HC ferrochrome to LC ferrochrome, sometimes ultra-LC and charge chrome. We worked with producers worldwide, and 95% of our market is in Europe. Nowadays, we have already become one of the biggest ferrochrome traders in Europe.

Asian Metal: Why did the prices of ferrochrome including HC ferrochrome and LC ferrochrome in European market increase rapidly and dramatically in Q1?

Mr. Lars: The major reason is that the market sees short supply and the strong spot demand. Our European clients, especially from the middle of European countries like Germany, France, Austria etc., mostly prefer Chrome content 65%min (high grade) ferrochrome for HC ferrochrome and LC ferrochrome. Those grades are highly preferred than Chrome content 60%min (low grade) ferrochrome. The major producers of high grade ferrochrome prefer to have long-term contracts directly with the consumers in Europe, and both sides prefer long-term contracts to have more security on the quantities. Therefore, the market shows lack of the spot supply. The market already shows this phenomenon since last year. So the prices already started to increase all over the past year. But in Q1 the speed of the increase became much faster. Consumers have expected that the Russian producers, which play important role in European ferrochrome market, could not supply as usual to the European market; and another big player is Kazakhstan, they faced the logistic problems to Europe. Previously Kazakhstan materials go through Russian and to Rotterdam, and now they have to go through Turkey, which caused the delay of the arrival. In additional, the market sees increased spot demand from consumers who prefer to build more stocks before the prices increase more. Therefore, we can see the prices of LC ferrochrome already increased from USD3.80/Ib Cr in Rotterdam at the beginning of Q1 to around USD5.90/Ib Cr at present; and the prices of HC ferrochrome increased from USD1.65-1.70/Ib at the beginning of Q1 to USD3.00/Ib Cr at present.

Asian Metal: What are the impacts of the increased prices on your company and the industry?

Mr. Lars: First of all, l think the major impact on our company is the pre-financing issue. We have to pay before the materials arrive, for example, during the loading process of the containers or on the way to us via ocean. Although the transportation of shipping and trucking have massive delays this year, we still need to pay on time. And after the materials come to us, we need to deliver to our customers which will be another additional period of time. Therefore, we have to pre-financing at least 3 months, sometimes up to 7 months, depending on where the materials come from. And also because the prices of ferrochrome increased hugely in Q1, even if we don’t serve quantities like last year, we have to pre-financing more than double of the amount. In addition, the credit insurance for most of our customers were at least cut. Because most of them did not produce normally and make much profit since 2020 due to the covid-19 situation. Our customers usually do not pay prompt and pay 30-60 days after the arrival of materials. For the whole industry, l think the influence is that those long-term customers will be more careful of the quantity because of the high prices, and might decline the amount. But the spot demand might increase because consumers want to save more stocks before the prices increase more.

Asian Metal: How was the market demand of ferrochrome during Q1?

Mr. Lars: The long-term demand is stable like late last year, but the customers would be more careful of the quantity because of the high prices, and they might decline the amount in the future. But the spot demand increased because consumers want to save more stocks before the prices increase further.

Asian Metal: Please introduce what industry your customers come from?

Mr. Lars: Our customers are mainly stainless steel mills and foundries, producing cold drawn steel, rust, acid and heat resisting steel, heat quality heavy plates for offshore, linepipes (pipelines), rolled bar steel, ingots for renewable energies, mechanical engineering and for railway technologies. The most important consumers for the steel mills’ final products are still the automotive industries Germany and France. The automotive industry has the strong demand of stainless steel, if they decrease the demand of stainless steel, the demand of ferrochrome would go down as well.

Asian Metal: Please predict the price trend in the second quarter of 2022.

Mr. Lars: From my perspective, the market would still shows short supply and strong spot demand. Nowadays the market, as expected, shows short supply from Russia which is one of the big suppliers of ferrochrome. And the second problem is the delayed logistic problem of Kazakhstan materials. Because before Kazakhstan materials mostly go through Russia, but now they have to go through Caspian Sea, Azerbaijan and Georgia to reach the Turkish ports to ship the material to Rotterdam. Therefore, l think the price would keep stay at the high level, but because nowadays the consumers also faced the high prices of energy cost and might stop in the future , l think the prices of ferrochrome could not increase further. l think the spot prices for LC ferrochrome Cr65%min would keep stable at USD4.50-5.00/Ib Cr; and prices for HC ferrochrome Cr65%min would keep at USD2.00-2.30/Ib Cr.

Asian Metal: What about the development plan of your company in the future.

Mr. Lars: We want to continue the trading business of ferrochrome, and we want to build good relationship with reliable partners for long-term contracts. This year we also plan to cooperate with Chinese ferrochrome suppliers more to discuss the possibility of purchasing ferrochrome from China.