NSSC Accepts 14% Higher FeCr Price for October-December

Nippon Steel & Sumikin Stainless Steel Corporation agreed with South African ferrochrome maker to increase high carbon ferrochrome price by 14.4% for October-December from July-September in last week, which increase for 2 quarters in a row. Ferrochrome producer in South Africa and stainless steel makers in Europe have already agreed to the price hike in the same range when chrome supply and demand gets tight due to higher stainless demand in Europe and other area while the recovery in demand is slow in Asia. NSSC accepts the higher price while ferrochrome production cost increases. The increase in material cost would lift stainless steel price.

The new price of ferrochrome, agreed with NSSC and Switzerland-based Xstrata, which has the operation site in South Africa, increased by 14 US cents to CIF 111 US cents per pound for October-December from July-September, which increased to more than 100 US cents for the first time in 4 quarters. The new price is about US$ 1,273 or 112,900 yen per tonne with 52% purity.

The producers requested big price increase when they couldn’t keep the operation without profitable selling price to cover higher cost including 25% higher rand rate against US dollar from the beginning of the year and 31.4% higher electricity cost.

Supply demand balance of chrome became tight in summer due to the firm stainless steel output in China and demand recovery in Europe and Japan. Ferrochrome producer in South Africa increased the production. However, overseas major stainless steel maker had to reduce the output when chrome was in short supply.

NSSC requested the producer to avoid big price increase arguing the importance of long-term stability in material supply and price to produce stainless steel. However, the firm agreed to the price increase considering the expansion by chrome makers in South Africa is key for growing stainless steel demand in future.

Stainless steel production cost increases by about 4,900 yen per tonne for stainless products with 18% chrome due to the price hike in ferrochrome. The cost increases by 12,000 yen from April-June, the recent bottom. NSSC would pass the cost on product price.