NSSC Accepts 55% Ferrochrome Hike for April-June

Nippon Steel & Sumikin Stainless Steel (NSSC) agreed with South African 2 suppliers by Thursday to increase the high carbon ferrochrome purchase price by 55% to April-June shipment from January-March. The firm followed the widest hike and the highest price settled by European makers earlier to secure requirement under tight supply. The hike represents around 28,800 yen per tonne of cost up for 18% chrome stainless products. Japanese stainless steel makers’ would pay annualized 150 billion yen more for chrome and the cost up could lift stainless price. NSSC agreed with Xstrata and Samancor Chrome to increase the price by 71 US cents to CIF 200 US cents per pound of chrome, which represents around US$ 2,293 per tonne for 52% chrome products, for April-June from January-March. The price renewed record 4 times in recent 5 quarterly negotiations and increased to 2.2 times of same period of 2007. The supply was tight due to higher stainless demand and gets very tight after electricity crisis in South Africa in January. With the supply concern when the largest supplier of Xstrata declared force majeure, the spot market price hit as high as 300 US cents per pound recently. The buyers are forced to accept such higher price to secure materials when South African suppliers cut the supply volume by around 20% from original contract due to limited electricity supply. Chrome supply is expected to keep tight due to limited electricity supply in South Africa. The chrome price could keep high level when the supply could decrease during South African electricity consumption peak season of July-September. The new price is around 91 US cents per pound higher than averaged 109 US cents for fiscal 2007 ending March 2008. With the high price, Japanese stainless industry with around 4 million tonnes of annual output could pay 36,000 yen per tonne or annualized 146 billion yen more for chrome for fiscal 2008.