Market situation of ferroalloys in Japan as of November 15th 2012 is as follows.
Summary: Market is watching China to see whether it will decide in December to alter export tax rates on ferroalloys and silicon manganese metals. A rumor is in circulation that the rates on silicon and manganese metals will be somehow altered, although it is still premature to expect any decision of lowering the rates because China prefers to maintain the export taxes unchanged to secure stable revenues, as China's exports have been in a slump due to the economy slowdown in Europe. Another rumor is that the central government is mulling on a new inland tax as a substitute for the export duty on the products, which may eventually damage the profitability of the producers of relevant industries.
Ferrosilicon: This week offer prices in China increased CNY 50 to CNY 100 per tonne from the beginning of November based on some sporadic higher priced offers in some of the local markets, but there seems little interest from Japanese buyers making the export offers almost unchanged. The raised offer prices were reportedly based on the forecasted seasonal tightening signs and the increased power rates, although Japanese buyers took it as only for testing purpose of the market interests. Chinese producers are not very sure if they should start trying to reduce inventory before the year end by selling at the current price or if they should wait for higher prices to come hopefully soon based on the burgeoning firmer market sentiment and the possibility, although small, of export tax easing. Offer prices of Russian material, mostly against spot inquiries, have been almost unchanged with only a few actual deals.
Silicomanganese: The range of prices, between the highs and the lows, in the offers of Indian material became wider earlier this month basically reflecting each seller's situation, i.e. whether they are keen to sell to reduce stocks or they are not required to rush. The price of Chinese origin material stopped declining last week and showed a sign of pick-up, making the offer prices to Japan a little higher, while there have been only a few deals done for December shipments to Japan due to the wait and see attitude of the Japanese buyers on the possibility, although small, of export tax easing from next year. The detoured Chinese origin materials through Vietnam apparently continue coming into Japan.
Charge Chrome: It is rumored that ESKOM, the South African power company, is planning to enter into the power buy back agreement with major power consumers again next year due to the forecasted power shortage. Most of the ferrochrome producers are, if approached by ESKOM, supposed to sell back the allocated power, making ferrochrome supply from South Africa more limited. Market is concerned about the possibility as it could well influence the Q1 and Q2 2013 benchmark price negotiations as a price raising factor. There has been no change in the situation of Japanese SUS mills regarding spot purchases that they are supplied more than enough through the existing long term contracts and have no room to buy any spot additional quantity.
Low carbon Ferrochrome: There has been no change in the market. This situation will continue until negotiations for the coming quarter (January to March of 2013) start in December 2012. No actual deals reported since the end of last month while offer prices have not changed.
Molybdenum: World price of molybdenum oxide fell again below USD 11.00 per pound Mo to USD 10.85 per pound. Despite the efforts of major suppliers in the western world since the Q2 (April to June) of 2012 to curtail output and the decrease in China's export during the first nine months of 2012 by 37% from the same period of 2011, cutting supplies to the market, the supply/demand situation seems still in oversupply.
Manganese Metal: Under the circumstances that many producers in China are still in curtailment reflecting the demand slump from domestic sectors, one of the leading producers of the metal in China (Xiangtan Electrochemical, Hunan) suspended operation on November 1st 2012 because of the continued low domestic demand. On the possibility that some other producers of the metal may follow if the sluggish demand continues further, market is gradually firming up with some bullish offers becoming the main stream. Actual deals are mostly done at CNY 12,500 per tonne, while the number of deals done at CNY 12,600 per tonne is increasing. However there are some points to keep in mind. Chinese SUS mills have been suffering low demand especially from the decreased exports and, above all, production of SUS 200's in China has been low due to the comparatively lower price of nickel, the competing metal for manganese in SUS production. In addition, Japanese buyers are not ready to make fresh purchases, waiting for the decision on the export duties to be made towards the year end. All these are negative factors for the metal producers. Current offers from China are at around USD 2,600 per tonne CIF with actual deals at USD 2,580 to USD 2,600 per tonne CIF.
Silicon Metal: The large-scale curtailment in the southern part of China has continued long (months) enough to support the offer prices at USD 2,100 per tonne CIF. Japanese buyers are, like manganese metal, at this moment waiting for the decision about the export duty on the metal.
