US ferrochrome market still showing signs of strength
2010-02-19 10:39:35 【Print】
PITTSBURGH (Asian Metal) 19 Feb 10 – The US high carbon ferrochrome market slowed down this week as the Chinese market continues on holiday, but further increases are expected in the upcoming weeks, according to active market participants. Overall pricing remains stable domestically as demand continues to pick up.
One US trader, who booked business as high as USD1.20/lb for truckload size quantities in the past week, cited prices stable at USD1.18-1.21/lb. The source remarked that higher consumption from stainless mills in the US, China, and Europe have all pushed to constrain mainstream supply sources.
“Steel mills here are supplementing current supply contracts with spot orders,” the trader said. “In the past ten years I have never done so much distribution volume per monthly basis. The US stainless industry is rallying and prices are showing that increased demand.”
Home to the world’s largest ferrochrome producers, changes in South Africa’s economy and political structure have forced price increases worldwide as well. Further tightening ferrochrome availability and bottom line production costs have been higher power costs and a strengthened South African rand (ZAR).
“It has been a tough year for the South Africans, and it is not going to be any better anytime soon. Profit margins are going to be slim and bottom lines will be higher. This all points to higher prices though,” the trader added.
Another US-based distributor, who indicated prices at around USD1.20/lb, speculated that there would likely be steady increases into the second quarter. The source last booked a small 60t sale at USD1.18/lb to a small end-user yesterday.
“Capacity utilization rates in the US continue to climb higher. Eventually there will be a correction, but the market fundamentals are much stronger now than they were in 2009. I do not see prices falling down below USD1.00/lb ever again,” the source said.
The ferrochrome market will be looking to the Q2 benchmark price for a potential short-term indicator of progress. Most active distributors speculate the charge chrome benchmark could be set at USD1.20-1.25/lb, short of the USD1.30-1.35/lb that the South African ferrochrome players are expected to ask for.
It should be also noted that overall high carbon ferrochrome prices in the US, which for most of the last year had lagged behind China and Europe, now lead both markets.
One US trader, who booked business as high as USD1.20/lb for truckload size quantities in the past week, cited prices stable at USD1.18-1.21/lb. The source remarked that higher consumption from stainless mills in the US, China, and Europe have all pushed to constrain mainstream supply sources.
“Steel mills here are supplementing current supply contracts with spot orders,” the trader said. “In the past ten years I have never done so much distribution volume per monthly basis. The US stainless industry is rallying and prices are showing that increased demand.”
Home to the world’s largest ferrochrome producers, changes in South Africa’s economy and political structure have forced price increases worldwide as well. Further tightening ferrochrome availability and bottom line production costs have been higher power costs and a strengthened South African rand (ZAR).
“It has been a tough year for the South Africans, and it is not going to be any better anytime soon. Profit margins are going to be slim and bottom lines will be higher. This all points to higher prices though,” the trader added.
Another US-based distributor, who indicated prices at around USD1.20/lb, speculated that there would likely be steady increases into the second quarter. The source last booked a small 60t sale at USD1.18/lb to a small end-user yesterday.
“Capacity utilization rates in the US continue to climb higher. Eventually there will be a correction, but the market fundamentals are much stronger now than they were in 2009. I do not see prices falling down below USD1.00/lb ever again,” the source said.
The ferrochrome market will be looking to the Q2 benchmark price for a potential short-term indicator of progress. Most active distributors speculate the charge chrome benchmark could be set at USD1.20-1.25/lb, short of the USD1.30-1.35/lb that the South African ferrochrome players are expected to ask for.
It should be also noted that overall high carbon ferrochrome prices in the US, which for most of the last year had lagged behind China and Europe, now lead both markets.
