NSSC Agrees Ferrochrome Price Hike by 26% with South African Suppliers

Nippon Steel & Sumikin Stainless Steel Corporation (NSSC) agreed with South African major ferrochrome suppliers to raise ferrochrome purchase price by 26% for July-September shipment until Thursday. NSSC continued the price negotiation to require the stabilization of ferrous scrap when chrome inventory keeps high. Since European stainless steel makers agreed in the price negotiation in June, NSSC approved the price hike for the first time in late 4 quarters. The hike range is equivalent to about 7,500 yen per tonne of cost up for stainless steel with 18% chrome. Ferrochrome price up would lead the hike for stainless steel products.

NSSC’s purchase price increases by 20 cents to CIF US 97 cents per pound of ferrochrome for July-September shipment from April-June. The price declined from 213 cents for July-September 2008 due to weak demand for stainless steel. The price became below 100 cents for January-March for the first time since April-June 2007 while rebounded to near 100 cents.

Ferrochrome suppliers such as Samancor Chrome, Exstrata’s South African base, continued to cut the production by 80% compared with the capacity due to slow demand. Suppliers supposed their business continuity is scared by rising ocean transport cost, coke price, electric power charge and higher rand rate. Consequently they required the price hike by a large degree.

Spot ferrochrome price is increasing by over 20 cents per pound since April. Stainless scrap price is rising worldwide. Stainless steel makers are moving into the price hike. NSSC took precedence to secure ferrochrome in the long run, which came to terms with the price hike.

Stainless demand keeps low. Ferrochrome inventory adjustment is progressing by the production cut of major suppliers, but NSSC pointed out chrome inventory adjustment is needed due to decreased output of stainless steel makers.