Negotiations With German Mills Are Anticipated To Be Settled On 90 US-Cents Per Lb. / Cr

The negotiations with stainless steel companies in Europe on price of South African charge chrome for shipments in July – September quarter of 2009 are supposed to be boiling down in this week. South African producers have targeted to rise the price to a level of 90 US-Cents per lb. of Cr and German mills, which are recovering their production of stainless steel, have moved to the direction to accept this price.

The benchmark price of South African charge chrome settled for shipments in April – June quarter has come to 69 US-Cents per lb. of Cr and, accordingly, new price of 90 US-Cents will become a rise of 21 US-Cents. This rise of the benchmark price for July – September quarter is thought to have been based on a recent rebound of spot price for high carbon ferro-chrome and, by taking into consideration of the factors which (1) it is inevitable to raise electric power fee in South Africa by 34%, (2) the exchange rate of South African Rand against US-Dollar has strengthened by 20% and (3) the cost to produce charge chrome in South Africa has increased for a reduction in production of ferro-chrome implemented for a long period, South African producers have taken the offensive to rise price of charge chrome for shipments in July – September quarter.

Since the Government of Germany has adopted the countermeasure to revive their economy by means of promoting car sales, the production of stainless steel in this country has firstly recovered on a basic tone but ArcelorMittal, based on Belgium and France, has been still suffering from a slump in their production of stainless steel. Therefore, the circumstances surrounding stainless steel in Europe are not even. However, in consequence of that South African producers have maintained the structure to reduce their production of ferro-chrome for a long period, their stocks of ferro-chrome have been decreased to a substantial extent and the output of ferro-chrome in South Africa for July – September quarter is anticipated to be decreased as usual for high fee of electric power to be applied to winter time. Therefore, the supply situation of ferro-chrome in South Africa is becoming tight. A boom in production of stainless steel, which China is increasing, has been included as a change of the circumstances.

South African producers have reduced the benchmark price of charge chrome for shipments in April – June quarter by 10 US-Cents per lb. of Cr and understood this reduction of price as " a bill " to stainless steel companies, having suffered from a depression of the market. Accordingly, it is supposed that, in prior to the negotiations, South African producers were expecting to receive a proper return. Under the present situation, South African producers seem to have felt that the price of 90 US-Cents per lb. of Cr to be settled for July – September quarter is a low level. A fall of price for high carbon ferro-chrome (charge chrome) started by a reduction of 20 US-Cents per lb. of Cr for shipments in October – December quarter of 2008 but will put an end to that for April – June quarter of 2009.