Major Steel Companies Plan To Construct Plants For Ferro-Alloys, Being Stimulated By Steeply Risen Alloys Prices
When price of manganese ore is boiled down, the ultimate matter comes to movements of prices for manganese ferro-alloys. Many companies have been producing manganese ferro-alloys, having caused to repeat excessive competition, and this structure for supplies of manganese ferro-alloys has suggested a possibility to occur a disturbance in the future, since many projects had stood together in large numbers in 2008.
So far major manganese mines have possessed their own plants for ferro-alloys and benefitted from 20 – 30% of their turnover and, being stimulated by a fever of the so-called boomed resources materials arisen in 2008, these manganese mines have taken an attitude to strengthen their own plants for production of manganese ferro-alloys. Namely, Assmang, Eramet , BHP Billiton, and so on have planned to construct new plants or new electric furnaces. This fever has been backed up by an existence of major steel companies.
Since the manganese project in Sishen district of South Africa has been promoted, such major steel companies as ArcelorMittal and Posco have participated in this manganese project and, in addition, ArcelorMittal has planned to construct a new plant for ferro-alloys in Coega industrial zone of South Africa. It was also informed that Posco will also launch to produce manganese ferro-alloys.
However, owing to the raging waves to reduce steel production from October of 2008 caused by a crisis of monetary markets, the guarantee to fulfill these projects as mentioned above on scale and within period is now being shaken. It was informed that some of these projects have been already postponed or withdrawn.
A key to grasp production of manganese ferro-alloys is the movements of prices for manganese ferro-alloys in China. A trigger to induce steel companies to construct their own plants as mentioned above is the steeply risen prices of manganese ferro-alloys produced in China. The market prices of Chinese manganese ferro-alloys in 2008 had shown a high volatility.
The highest price of Chinese silico-manganese for export in 2008 was US$2,500 per metric ton CIF Japan as recorded in June. On the other hand, the lowest price of Chinese silico-manganese for export recorded on the end December of 2008 was US$1,350 CIF as fallen by nearly half of the highest one and this considerable fluctuation of price for Chinese silico-manganese in 2008 gave a reality of market prices for Chinese manganese ferro-alloys moved in 2008. The situation of " flowers falling in the wind after cherry blossom viewing " has been carried over by an aftereffect of excessive stocks.
China exported 3.03 million tons of ferro-alloys in 2008, including 1.10 million tons of manganese ferro-alloys. China exported ferro-alloys to 65 countries in the world and, therefore, China's influence on market prices of ferro-alloys is not negligible, because prices of ferro-alloys exported from China have been considered as an influential index in the international market. The Central Government of China has enforced from the 1st January of 2009 the regulations for exports of ferro-alloys from China, having adopted the system to qualify exporters and to issue export licenses to these qualified exporters, but avoided to put practice in the measure to strengthen further the regulations for exports of ferro-alloys (transaction between qualified producers and qualified traders on back-to-back basis), because advantages and disadvantages have been confused and a strong opposition to this case has existed.
The production of crude steel in China turned to decrease from September of 2008 and the output in the calendar year (January – December) of 2008 came to 502 million tons, having had a small increase of 1.7% from that in the preceding year of 2007. For a reference, China produced 17.05 million tons of ferro-alloys in January – November of 2008, having increased by 5.8% compared with that in the same period of 2007, but the production of ferro-alloys in China at last turned to decrease from October of 2008, because China has inclined to reduce their steel production from September.
The Central Government of China announced in November of 2008 a guideline for rearrangement of composition in enterprises to produce ferro-alloys and has decided the policy to regulate the facilities to produce 20 million tons per annum of ferro-alloys with a target to finish it by 2010. This has aimed to reduce the facilities by 24% compared with those in 2005. In line with the countermeasures for environmental pollution and energy saving, Chinese Government has intended to regulate production and exports of ferro-alloys.
Manganese ferro-alloys and ferro-silicon have shared a majority of ferro-alloys produced in China and, in order to produce manganese ferro-alloys, Chin has to import a majority of manganese ore to be used as raw material for its production. Accordingly, China has the constitution to react sensitively to a tide of prices for resources materials, which China has to import from overseas countries.
Australia, South Africa, Gabon and Brazil are four major countries to supply manganese ore to China and, therefore, have held a strong power to influence on the imports by China, having caused an instability of price for manganese ore.
2008 was the year, having shaken the supply of manganese ore for China by the oligopoly from four major producing countries of manganese ore. China imported 7.58 million tons of manganese ore in 2008 (compared to 6.64 million tons in 2007), including 5.98 million tons (shared 79%) supplied by four major countries as mentioned above. Under this constitution, price of manganese ore imported by China in 2008 had risen steeply. The price of medium grade manganese ore with Mn 45%, as a typical quality for China, had risen from US$11 per Mn 1% CIF China at the beginning of 2008 to US$16.30 CIF.
When price of manganese ore imported by China had risen to a higher level than US$16 per Mn 1% CIF, the cost to produce manganese ferro-alloys in China turned to be not payable, having become a loss. By reason of the steeply risen price for manganese ore as raw material, price of Chinese silico-manganese had once risen to a level of US$2,500 per metric ton CIF Japan but it was not possible to maintain this higher price for a long period. On the contrary, owing to oversupply of Chinese silico-manganese, its price turned to fall and, when price of Chinese silico-manganese had fallen to a lower level than US$1,800 – 2,000 CIF, the production of silico-manganese in China had shown a loss.
The jinx, which, after Olympic Games were over, a recession of economy arises as a reaction to this event, had appeared in Japan and South Korea in the past years and this case is also thought to have been applied to the Beijing Olympic Games. In order to enhance national glory, China successfully held the Beijing Olympic Games in August of 2008 but, in consequence of accumulated stocks of materials purchased in advance of the Beijing Olympic Games, new businesses were depressed to a considerable extent from autumn of 2008. In anticipation of traffic congestion supposed to emerge from this event, many countries of the world, including domestic market of China, procured in advance materials from China and, after the Beijing Olympic Games were over, huge stocks of materials have been left.
Consumers have held enough stocks of ferro-alloys, which are durable for 2 – 3 months at least without purchases from China, and the ferro-alloy industry of Japan has been placed on the same situation with excessive stocks of ferro-alloys. This aftereffect was unable to be resolved even in December of 2008 and has been carried over to January – March quarter of 2009. Incidentally, owing to a crisis of monetary market emerged on the worldwide scale from October of 2008, raging waves to strengthen cash flow have pursued curtailment of stocks and cutback of new purchases. (Tue 10Feb,2009) – TEX Report
...
read more
Posts
