The second quarter was again characterised by a severe deficit in the ferrochrome market owing to production curtailments from the Eskom buy backs as well as cut backs in Western European and Indian production. Overall South African producers were operating at around 58% capacity utilisation producing roughly 481,000 down from 590,000 in 1Q12. We are forecasting capacity utilisation of 60- 65% in line with the normal third quarter production rates in South Africa to account for higher electricity tariffs. http://www.bharatbook.com/metals-and-minerals-market-research-reports/trends-in-the-ferrochrome-stainless-steel-markets-a-quarterly-analysis-and-review.html

Despite this deficit in the ferrochrome market, the stainless steel industry is still extremely price sensitive and will not tolerate a higher benchmark price. Moreover, in Chinese market, ferrochrome prices have traded on a par with production costs and there is a substantial surplus of both stainless steel stocks and ferrochrome which will serve to cap any price increases.

In June ferrochrome spot prices in Europe at $1.14-1.19/lb, up from $1.14-1.15/lb in May. Similarly US and Russian spot prices improved over the period by 5% and 7% respectively. Consequently, we believe that the chance of a rollover in the 3Q12 benchmark price ($1.35/lb) is extremely good. Again China remains the biggest risk to higher ferrochrome prices. Whilst prices have improved, there is a large discrepancy between Chinese spot prices of South African ferrochrome (90-95c/lb) and European prices of ($1.14-1.19/lb) albeit often there is a difference in the quality of ferrochrome bought by Chinese producers. Moreover, Chinese domestic prices are trading on par with their operating costs (RMB7,700-7,900/tonne) and it is unlikely that stainless steel producers will be prepared to absorb any further price increases.

Table of Contents
1. Macroeconomic Review 7
1.1 America 7
1.2 Asia 11
1.3 Europe 14
2. Quarterly Ferrochrome Trends 17
2.1 Ferrochrome Consumption 17
2.2 Ferrochrome Production 22
2.3 Ferrochrome Prices 28
2.4 Trade of Chrome Ore 30
2.5 Trade of Ferrochrome 32
3. Quarterly Stainless Steel Trends 34
3.1 Stainless Steel Scrap 34
3.2 Stainless Steel Consumption 36
4. Longer Term Outlook 41
4.1 Ferrochrome requirement to support Stainless Steel production 41
4.1.1 Capacity Additions 42
4.2. Ferrochrome Production Outlook 47
4.2.1 Capacity Additions 47
4.3 Ferrochrome Cost Analysis 56
4.3.1 Exchange Rates 57
4.3.2 Reductants 58
4.3.3 Energy Costs 61
4.3.4 Ore Prices 65
4.3.5 Carbon Taxes 67
4.5 Long Term Ferrochrome Price Outlook 69
4.5.1 Five year Forecast to 2015 69
4.5.2 Ten Year Price Forecast 70
5. Chrome Ore Markets 71
5.1 Chrome Ore Production 71
5.1.1 Capacity Additions 71
6. Appendix 76
6.1 Data 76
7. Acknowledgment and References 77

List of Charts
Chart 1: Ferrochrome Outlook Summary 3
Chart 2: US Unemployment Rate 8
Chart 3: US Purchasers’ Management Index 8
Chart 4: Western Europe- crude stainless steel quarterly production 20
Chart 5: W. Europe- crude stainless steel quarterly production 20
Chart 6: Wuxi Market 21
Chart 7: Foshan Market 21
Chart 8: Chrome Ore Inventory at Chinese Ports 27
Chart 9: HC-FeCr Contract Prices 28
Chart 10: HC-FeCr Spot Prices 28
Chart 11: HC-FeCr Rand/Tonne Equivalent 28
Chart 12: Spot vs Contract 28
Chart 13: Total Chinese Chrome Ore Imports 30
Chart 14: South African Exports of Chrome Ore 30
Chart 15: Chinese Net Import of Ferrochrome 32
Chart 16: South African Ferrochrome Exports 32
Chart 17: Chinese Scrap Import 34
Chart 18: Scrap Prices 34
Chart 19: Consumer linked manufactured products 37

For more information kindly visit :
Trends in the Ferrochrome & Stainless Steel Markets: A Quarterly Analysis and Review

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