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China to cut ferrochrome imports from south africa - report by wgre ethbtn
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China to cut ferrochrome imports from south africa - report |
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Business,Business News,Business Opportunities
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It is reported that China's all important stainless steel makersare to reduce purchases of imported South African ferrochrome,turning to cheaper Chinese alloy producers who use imported,unprocessed chrome ore. Domestic Chinese ferrochrome costs about half of that of importsfrom SA, where production is being squeezed by soaring electricityprices and by uncertainty over Eskom ability to deliveruninterrupted power. China is busy adding domestic ferrochromecapacity, with 1.76 million tonnes of new annual capacity coming onstream between 2012 and 2015. To put that in perspective, China imported 409 316 tonnes offerrochrome in fourth quarter of 2011, of which 271706 tonnes wasSouth African. By the middle of this decade, new Chinese capacityis likely to lead to a global oversupply even if the South Africansclose more furnaces.
Executives of existing or would be South African ferrochromeproducers Merafe CEO Mr Stuart Elliot and Ruukki director Mr DankoKonchar among them have reacted to the Chinese competition bycalling on Pretoria to tax chrome ore exports. At a March 2012 conference in Hong Kong, Mr Konchar urged Pretoriato impose an export tax of USD 100 per tonne. At that time oreprices were only fractionally over USD 200 per tonne landed atChinese ports. Higher, taxed ore export prices could, the idea was, tip thecompetitive balance in SA ferrochrome producers favor.
SA oreexporters, who sit on four fifths of the global chrome resource,might demur over interference in their trade. Should Chinese ferrochrome makers object to SA ore prices theycould turn to Zimbabwe, Turkey, India or Kazakhstan. That's despitethe fact that Zimbabwe is continuing to restrict ore exports, thatKazakhstan continues to push for its domestic ore to be smelted athome and that India is adding export quotas to its existing 30% andvalorem export tax. China itself was holding substantial stocks of ore at the end of2011 and is expected to draw on them rather than pay higher importprices.
There's enough chrome in the ground worldwide to satisfydemand for several centuries. In a new report, Johannesburg based Core Consultants says SAferrochrome producers cut output by 15% in this years firstquarter. Producers continue to struggle with Eskom's power buybacks, which have curbed electricity availability. The upshot, says Core, was that SAs ferrochrome producers onlyoperated at 55% capacity in this years first quarter, though thereare upper end suggestions of a rise to 65% in the second quarter.Smelters continue to be closed or converted to ferromanganeseproduction. Back in 2001, SA produced 50% of the world's ferrochrome.
By 2010the share was down to 42% and falling. Global output of ferrochrometotaled 2,072 million tonnes in first quarter of 2012 with a smallsupply; demand deficit. An expected return to surplus this quartershould contribute to some price stodginess. Near term demand forstainless steel and, by extension of ferrochrome, is hardlypositive.
Europe's demand for ferrochrome for current steel production islikely to require a protracted convalescence, though steelmakersappear to be replenishing alloy stocks, as are US steelmakers.China appears set to draw down its stainless stocks before raisingproduction. In the EU, first quarter of 2012 high carbon ferrochrome contractbenchmark prices fell by some 4% QoQ to USD 1.15 per pound but areexpected to advance to USD 1.25 or more in the second quarter. Inthe US, spot prices of between USD 1.17 and USD 1.21 per pound were12% QoQ higher. In contrast, first quarter low carbon prices declined generallyacross the globe, falling from USD 2.18 to USD 2.28 per pound earlyin January 2012 to USD 2.07 to USD 2.12 per pound in early March2012.
SA largely produces the high carbon product. High carbon ferrochrome producers are being squeezed by risinginput costs. For the longer term, Core estimates that rising costswill force producers to lift prices to USD 1.32 to USD 1.35 perpound by 2016 if they are to remain profitable. Ore may be cheap, but the SA smelters that are crucial to thecountry's beneficiation hopes will be closely watching Eskom'selectricity prices and supply. Source - Business Live. I am a professional writer from Sweaters & Knitwear, which contains a great deal of information about motorcycle pet carrier , cooking oil sprayer, welcome to visit!
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