Japan's Nippon Steel & Sumikin Stainless Steel Corp (NSSC) may skip shipments of ferrochrome from South Africa in the first quarter due to weak demand and a glut in ferrochrome supplies, a company official said on Wednesday.
It would be the first time the company had deferred ferrochrome shipments underscoring how demand for ferrochrome has slumped due to the sharp economic downturn.
South Africa is the world's biggest producer of ferrochrome, a key component in stainless steel to deter corrosion.
NSSC is still in discussion with leading South African ferrochrome suppliers on how much it will buy under 2009 contracts.
The company typically holds term talks with Xstrata Plc and Samancor Chrome, though the official declined to name companies in its recent negotiations because talks are still taking place.
On Monday South Africa's ASA Metals said that some of its clients were deferring shipments of ferrochrome due to weak demand for stainless steel.
The term price for ferrochrome to Japan for October-December fell 20 cents or 9 percent to $1.93 a pound, marking the first cut since 2006, amid signs the global economy was heading for a steep downturn.
In contrast, the term price for the previous quarter, in July-September, had been set at a record high of $2.13 due to supply tightness.
Source: Reuters
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