Quarterly Ferrochrome Price Hits First Increase in 4 Quarters

Ferrochrome quarterly benchmark price was set at the European side. The price increases by 17.4% for April-June from January-March, which is the first increase in 4 quarters, according to Japanese industry sources. The hike is more than expected by Japanese industry due to tighter supply balance under limited power supply and chrome makers’ production cut in the major producing country of South Africa. Japanese stainless makers would follow the result while the makers argue Asian chrome supply is dull compared with European situation. The hike represents around 6,600 yen per tonne of higher cost for stainless with 18% chrome pushing stainless price.

World leading ferrochrome maker, Xstrata of Switzerland and Luxemburg based stainless major, Aperam agreed to increase the price by 20 US cents to 135 US cents per pound of chrome for April-June from January-March. The price recovers a year earlier level.

German stainless major, ThyssenKrupp was price setter in European side before. Xstrata apparently shifts the marketing target to other stainless majors including Aperam and Acerinox of Spain when ThyssenKrupp separates the stainless unit, Inoxum to consolidate with Outokumpu of Finland, which has own ferrochrome production, and Inoxum reduces the upstream operation as a part of the merger reducing ferrochrome purchase.

South African ferrochrome makers reduce the production by 40-50% due to limited power availability .The demand in Europe increases when the buyers adjusted overstock. The higher price is partly due to higher production cost when South African electricity cost doubled in past 3 years.

Asian ferrochrome supply is still loose and the spot market price is around 10% lower than European level, according to Japanese sources. However, Japanese stainless makers would accept the higher price to keep the benchmark system and to support sustainable operation of indispensable South African ferrochrome makers. With the same level of hike, Japanese purchase price increases by 16.3% to 143 US cents per pound of chrome for April-June from January-March.