Ferro Alloys

The Commerce Department recently announced an affirmative final determination, and anti-dumping duties, in the  investigation of imports of silicomanganese from Australia.

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For anti-dumping investigations, dumping occurs when a foreign company sells a product in the U.S. at less than its fair value. Commerce determined that imports of silicomanganese from Australia have been sold in the U.S. at a dumping margin of 12.03%.

The sole mandatory respondent, Tasmanian Electro Metallurgical Company Pty Ltd. (TEMCO), received a final dumping margin of 12.03% Because there were no other respondents, TEMCO’s margin also serves as the final dumping margin for all other producers/exporters in Australia.

As a result of the final affirmative determination, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits equal to the applicable weighted-average dumping margins.

What’s Silicomanganese?

The petitioner for this investigation is Felman Production, LLC.

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The scope of this investigation covered all forms, sizes, and compositions of silicomanganese, except low-carbon silicomanganese, including silicomanganese briquettes, fines, and slag.

Silicomanganese is a ferroalloy composed principally of manganese, silicon, and iron, and normally contains much smaller proportions of minor elements, such as carbon, phosphorus, and sulfur. It is often used as a reducing agent in the manufacture of low-carbon ferromanganese.

The Raw Steels MMI held steady at 47 this month. Although international steel prices remained depressed in January, domestic prices drew a different picture.

US Mills Increase Prices

US steel mills began raising prices in December, leading to higher domestic prices in January. Domestic supply had declined significantly in 2015, with capacity utilization close to 60%.

Raw-Steels_Chart_February-2016_FNL

At the same time, with the uncertainty regarding anti-dumping actions, finished steel imports have slowed.

Free Sample Report: Our February Metal Buying Outlook

Finally, steel companies’ shipments were impacted over the past few months as service centers focused on destocking and now that inventory has finally come down, service centers will finally need to start restocking activity. This combination of factors left US mills in a sweet spot in 2016 to increase prices.

Sustainable Increase?

Domestic prices might continue to rise in the coming weeks. After the huge price slump in 2016, domestic prices deserve a bounce in Q1. However, mills won’t likely succeed in raising prices for too long. Read more

Copper is often used as the bellwether of the global economy (when copper prices are high, global growth is strong, goes the theory) and although it is a simplistic argument, it has a certain underlying logic.

So too does the price of minor metals consumed by the stainless and alloy steels industry as a bellwether of the health of industrial activity regionally – if not globally.

Take ferro-tungsten, for example.

Read more

Dropping 0.9 percent on the LME, the nickel 3-month price showed the most movement on May 3, 2012, closing at $17,470 per metric ton. The primary nickel price weakened by 0.5 percent on the LME, settling at $17,430 per metric ton. The Indian primary nickel cash price finished the market day up 0.3 percent. The price of Chinese primary nickel saw a 0.8 percent decline.

Chinese stainless steel closed mixed yesterday. The price of Chinese ferro-chrome was unchanged, remaining above $1,300 per metric ton. The price of Chinese ferro-moly continues hovering above $23,000 per metric ton for the fifth day in a row.

The price of Chinese 304 stainless coil increased 0.5 percent; the Chinese 304 stainless steel scrap price rose by 0.5 percent as well. The price of Chinese 316 stainless coil remained essentially flat at above $5,000 per metric ton. The price of Chinese 316 stainless steel scrap was unchanged at below $2,900 per metric ton.

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LME Nickel Price Declines 2.3 Percent

On May 1, 2012, the day’s biggest mover was the LME price of primary nickel, which saw a 2.3 percent decline to $17,835 per metric ton. The 3-month price of nickel weakened by 2.3 percent on the LME, settling at $17,910 per metric ton. The cash price of Indian primary nickel saw little change in its price on Tuesday, keeping under $20 per kilogram. The price of Chinese primary nickel held steady above $21,000 per metric ton.

Stainless Steel and Inputs Prices Steady

Chinese stainless steel prices were flat for the day.

Chinese 316 stainless coil stayed flat at above $5,000 per metric ton. The price of Chinese 304 stainless coil continues hovering below $3,000 per metric ton for the fifth day in a row. The price of Chinese 316 stainless steel scrap showed little movement on Tuesday, holding below $2,900 per metric ton. For the fifth day in a row, the price of Chinese 304 stainless steel scrap remained essentially flat below $3,000 per metric ton.

The price of Chinese ferro-chrome held steady above $1,300 per metric ton, while Chinese ferro-moly prices saw essentially no change for the fifth day in a row, remaining around $23,000 per metric ton.

LME Steel Billet 3-Month Price Plateaus

Staying around $490 per metric ton for the day, the steel billet 3-month price remained flat on the LME. The LME cash price of steel billet flattened at $475 after two days of improvement.

Chinese steel and inputs prices closed flat for the day. The high and low prices of iron ore 58% fines from India hit between $135 and $140 per dry metric ton. The price of Chinese coking coal saw little movement, while Chinese slab held its value on Tuesday at under $700 per metric ton.

The 3-month price of US HRC futures showed little movement yesterday, hovering around $670 per short ton. The spot price of US HRC futures was unchanged at $685 per short ton.

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Chinese Ferro Alloys Taking It Easy

On April 16, 2012, the price of Chinese ferro-moly was unchanged, hovering above $23,000 per metric ton. For the fifth day in a row, the price of Chinese ferro-chrome remained essentially flat, staying above $1,300 per metric ton.

Chinese Stainless Prices Holding Pat

Chinese 316 stainless steel scrap saw little change in its price yesterday, hovering in the range of $2,900 per metric ton. Chinese 304 stainless coil held its value yesterday at near the $3,000 per metric ton mark. The price of Chinese 304 stainless steel scrap hardly moved yesterday, remaining in the mid-$2,900 per metric ton range. At over $5,000 per metric ton, the price of Chinese 316 stainless coil kept steady as well.

Nickel Prices Slowing Down

Following a two-day rise on the LME, the 3-month price of nickel flattened at $18,455 per metric ton. The primary nickel cash price flattened out at $18,400 per metric ton following a two-day increase on the LME.

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Chinese 304 Stainless Steel Scrap Prices Fall 3.7 Percent

Chinese 304 stainless steel scrap saw the biggest price shift of the day in stainless prices, dropping 3.7 percent on April 11, 2012. For the fifth consecutive day, Chinese 304 stainless coil prices held flat near $3,000 per metric ton. Chinese 316 stainless coil prices saw essentially no change for the fifth day in a row, remaining around $5,000 per metric ton. The price of Chinese 316 stainless steel scrap remained essentially flat as well.

For the fifth straight day in the ferro alloys market, the price of Chinese ferro-moly held between $22,900 and $30,000 per metric ton. Chinese ferro-chrome remained essentially flat between $1,300 and $1,350 per metric ton.

The price of primary nickel rose by 0.8 percent on the LME to $18,010 per metric ton. The price of Chinese primary nickel declined 0.4 percent to CNY 131,500 ($20,837) per metric ton.

LME Steel Billet Cash Price Down Following Flat Spell

On April 11, 2012, the steel billet cash price on the LME fell by one percent and landed at $480 per metric ton, making it the day’s biggest mover in steel prices. Following three days of little change, the LME 3-month price of steel billet rose by one percent to $505 per metric ton.

Chinese raw steel prices closed flat for the day. The range of prices of iron ore 58% fines from India closed under $130 per dry metric ton. For the fifth day in a row, the price of Chinese coking coal remained essentially flat. The price of Chinese slab held flat as well.

The 3-month price of US HRC futures contract saw essentially no change for the fifth day in a row, remaining around $692 per short ton. For the fifth consecutive day, the US HRC futures contract spot price held flat at $690 per short ton.

After Three Flat Days, Cash Price of Primary Aluminum Drops

On April 11, 2012, the day’s biggest mover in aluminum prices was the LME cash price of primary aluminum, which saw a 0.2 percent decline to $2,050 per metric ton. For the fifth day in a row, the 3-month price of primary aluminum remained essentially flat on the LME at $2,089 per metric ton.

Chinese aluminum prices were flat for the day. The price of Chinese aluminum scrap saw essentially no change for the fifth day in a row, remaining between $2,600 and $2,650 per metric ton. For the fifth consecutive day, the price of Chinese aluminum billet held flat between $2,500 and $2,550 per metric ton. The price of Chinese aluminum bar remained steady as well.

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In a recent interview by Reuters, I said I did not see other non-ferrous metals facing significant closures by Western producers as we have in aluminum. (Reuters was exploring the idea that smelters closures by Alcoa in particular, but also Rio Tinto and Norsk Hydro, were likely to be just the start of a much more intensive program, and whether the trend would cut cross other metals groups.)

My position, and Reuters’ conclusion, was that we weren’t seeing the start of massive smelter closures as much as a simple migration of capacity from higher-cost mature markets to lower-power-cost developing markets like the Middle East; as such, it was unlikely to be the start of a widespread trend among all metals.

However, as we may have said before, ferrochrome is all about power, and results for ferrochrome producers in different locations may point to a trend that could develop for that material in a similar way to aluminum.

Ferrochrome, the stainless steel additive, is a power-hungry product requiring huge amounts of electricity in electric arc furnaces to melt chrome-iron oxide ores into ferrochrome at 2,800 degrees Celsius. Historically, South Africa has enjoyed relatively low power costs. Quoting South African producer Merafe, the texreport says the country was paying US $0.06 per KwHr in 2010 (compared to $0.04 in Kazakhstan, $0.085 in China and $0.09 in India), but that expected power cost increases by Eskom, South Africa’s near-monopoly power producer, could lift that to $0.135 by 2015, compared to comparable levels in China, but still just $0.05 to $0.06 in Kazakhstan.

Source: HSBC

So a Reuters report this week noting that the Kazakh mining group ENRC was expecting to be operating at full capacity of some 400,000 tons this year (after some emergency repairs dented production in late 2011) should come as no surprise.

At the same time, South Africa’s Merafe reported a ferrochrome production decline to 263,000 tons, with capacity utilization reduced to 65% for 2011 and production volumes 12 percent lower than in 2010 — even as global stainless production hit an all time high at the start of 2011.

With expectations of a 25 percent power rate increase likely to be introduced by Eskom in April, we could see the start of a gradual decline in South Africa’s domination of the ferrochrome market, a process that arguably has been in motion for years, but which could accelerate if, as expected by HSBC, China begins to ramp up domestic ferrochrome production and import chromite ore. The bank expects China’s share of global ferrochrome production to rise from 24 percent today to 32 percent by 2015.

 

Source: HSBC

Ferrochrome prices have fallen during 2011, from around $1.25 per pound in Q1 2011 to $1.15 per pound this quarter, but rising power costs, particularly in South Africa, will probably put a floor under the market and support current levels, as any further deterioration will see (especially South African) capacity idled.

If Italy’s role in the European debt crisis is to have any tangible effect on the metals markets, it has already appeared on the European stainless steel front.

SMR, the Austria-based steel analysis firm, is forecasting that stainless steel demand could fall by as much as 10 percent in Italy in 2012, according to Reuters. Increased competition from Asian countries (which has been in effect for years now) and new austerity measures hoping to offset the sovereign debt crisis will be to blame, according to SMR.

Slackened demand is forcing the likes of ThyssenKrupp, Outokumpu and other European stainless steel makers to close down production significantly, a decision mainly led by new private equity investors who are bearish on the 2012 outlook, according to the article. It looks as though stainless steel demand in Western European economies (Italy, Germany, and others) will flat-line over the next year and a half, with Eastern European economies the only ones offering any sort of bright spot. However, US and global demand both look to be positive in 2012.

Key Components of Stainless Steel What Are They Doing?

Nickel prices should remain steady if not supported above $20,000 per ton, Marcus Moll, SMR’s founder, told Reuters. Also, the uptick in US molybdenum oxide prices could indicate increasing US demand.

The US moly oxide price stood at $12.78 per pound at the end of October, then rose to $12.83 per pound on Nov. 7; up to $12.93 on Nov. 10; and rose again on Nov. 14 to $13.43 per pound, according to our MetalMiner IndX. Although as of this writing the price has dropped to $13.25, Thompson Creek, a North American moly producer, quoted an average moly oxide price of $13.60 per pound on its website.

Ferrochrome prices, however, have fallen off in China. The local price fell to 8,300 yuan per metric ton from 8,500 on Nov. 8, and although it may appear as a small drop, sentiment from South African ferrochrome producers support the notion that prices in China have been low for a while. “People can’t lend at [the current] price level into China, Emmy Leeka, CEO of ferrochrome producer Hernic, told Reuters in another article. “Quite a number of guys are actually producing and dumping material into China below costs¦some of them are losing money already.

Industrial production and capacity utilization are both up slightly this month, based on the most recent numbers, and inflation is down, perhaps spurring consumers to make larger purchases (especially before the holidays); but can it be taken as a sign that the stainless market in the US is healthy? For one thing, the MEPS price index for North American 304 stainless dropped only 6 percent from September to October this year, compared to the EU’s drop of 10 percent. Ultimately, however, the picture is looking better in the US than in Europe, which is on the verge of its own 2008-style bust.

While we were discussing our coverage of nickel and stainless steel in a highly formal editorial meeting (read: intra-office banter), we happened upon the conference bill for the Institute of Scrap Recycling Industries (ISRI)’s 2011 Commodities Roundtable Forum right here in Chicago. Turns out, ISRI was hosting a forum on the state of nickel and stainless the following morning. Here are some highlights from the conversation.

First off, the most impactful, far-reaching set of questions seemed to be: what is the health of the US stainless industry today? Is the stainless business still a good one to be in?

Of course, reactions were mixed. The overarching sentiment on both fronts seemed positive. As we all know, the US business cannot be thought of in solely domestic terms anymore, but as a cog in the global stainless steel market.

“Good growth potential in the next five years globally, which is the key it’s a global market, said Bruce Jasiewicz, national manager of sales and marketing of specialty steel/nickel alloys for O’Neal Steel. Jasiewicz said that when assessing the health of the industry, he looks at both the commodity grades (your typical stainless grades used for consumer kitchens, etc.) and specialty grades (petrochemical, aerospace, nuclear, etc.). The higher-grade specialty sector is looking “very strong, he said, while the construction and home sectors are relatively strong, as the nature of demand is so cyclical. “In the oil industry, in offshore drilling, they need more and more materials, so it’s very strong, he stressed. In the Marcellus Shale, shale oil exploration in particular is already driving the demand for these materials.

Jasiewicz projects “5 to 10 percent growth on the stainless side for the next decade, he said.

Of course, much of any growth equation has to do with the Asian markets, especially China. Barry Hunter of New Jersey-based Hunter Alloys maintained that everything changed starting in 2005, when the stainless market in China really took off. China’s primary source of these ores is Indonesia, he said, but starting in 2012, Indonesia will reduce exports to use nickel primarily in its domestic market; the Chinese will just end up moving in local operations to keep using nickel and pig iron there.

The Chinese use of nickel and pig iron has given them a competitive advantage globally, said Mark Parr, a managing director and metals analyst at KeyBanc Capital Markets. As far as the nickel market goes, while iron and zinc are almost double where we were in 2008, nickel is the one that’s lagged.

China’s 2010 nickel/pig iron production was up 75 percent, according to Parr. Given the situation that we have with plenty of scrap flows and relatively weak demand in developed economies, Parr noted that supply has caught up with demand, and he’s looking for nickel to hold pat. “It wouldn’t surprise me if nickel dropped below $20,000 soon, and stayed there for a while, he said.

–Taras Berezowsky

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