China Becomes Net Importer Of Ferroalloys

China became a net importer of ferroalloys in January and February, according to customs statistics. The country imported 242,211 tonnes of ferroalloys and exported 177,697 tonnes in the first two months of 2009.

The main reason is the much lower level of exports and, since price of high carbon ferrochrome produced in China is now higher than that produced in South Africa, India and Kazakhstan, the imports of high carbon ferrochrome into China have increased to a considerable extent. The price of ferrosilicon and silicon metal produced in China has remained competitive in the export market.

Higher raw materials costs and other cost increases to offset the enviornmental impact of production has led to an erosion of the cost advantages previously by China. As a result almost half of China's ferrochrome demand has to be satisfied by imports.

In addition, falling prices for ferrochrome in the western market along with a decreased demand has caused a trend to sell more ferrochrome into China.

The unit prices of ferrochrome imported into China in February of 2009 and calculated from the values cleared the customs were:

1. High carbon ferrochrome at 62.78 US Cents per lb of Cr CIF on Cr 65% base of Cr CIF on Cr 50% base

2. Low carbon ferrochrome at 93.5 US Cents per lb of Cr CIF on Cr 65% base.

In view of the facts that China imported considerable quantities of chrome ore at higher prices in 2008 the cost price to produce high carbon ferrochrome in China is estimated to be higher than 65 US Cents per lb Cr. Western suppliers are supposed to have taken the offensive to sell high carbon ferrochrome to China at lower prices than 60 US-Cents per lb. Cr CIF in February and March of 2009.

China imported silicomanganese at USD 871 per tonne of material CIF in February of 2009 and this price level is lower than that at which China exported silicomanganese produced by themselves. Chinese silicomanganese has been offered for Japan at USD 1,300 per metric ton CIF but when export duty of 20% and ocean freight are deducted from this CIF price, its FOB price comes to USD 1,050 per metric ton. Indian silicomanganese is currently being offered at USD 1,100 per tonne CIF Japan, which is USD 200 per ton lower than that of Chinese product.

South Africa, India and Kazakhstan are the countries producing raw materials for manganese-based and chrome-based ferroalloys and, in view of the depression in the markets at present, the matter in question is whether or not Chinese products are able to compete with those produced in the three countries as mentioned.

Source: Steel Guru