NSSC Agrees to Reduce FeCr Price by 54.9% for January-March

Nippon Steel & Sumikin Stainless Steel Corporation (NSSC) agreed with South African supplier to reduce ferrochrome purchase price by 54.9% for January-March from October-December. The firm followed earlier settlement in Europe. The firm decided to keep continuity of the price by setting standard for negotiation for April-June period while the firm considered putting off the purchase in January-March when the firm has enough chrome inventory under the major production cut.

The price is CIF 87 US cents per pound of chrome for January-March, which represents US$ 997 per tonne for ferrochrome with 52% of chrome and 106 US cents lower than October-December level. The price decreased for 2 quarters in a row and deceased to less than 100 US cents for the first time since April-June 2007.

Ferrochrome makers are in major production cut and some makers stopped the all operations when stainless makers reduce the production by more than 50% under slow demand. Ferrochrome spot market price decreased to less than 100 US cents per pound due to slower economy since late 2008 while the spot price hit as high as 270 US cents for products from South Africa in first half of 2008.

The 106 US cents per pound of reduction represents 41,100 yen per tonne of cost decrease factor for stainless steel with 18% chrome. However, NSSC and other Japanese stainless makers cannot enjoy the lower cost when they should use high priced inventory for months.