Chromium Market Update (April 11, 2012)

By Karan Kumar – Exclusive to Chromium Investing News

Ferrochrome (HC basis Cr 60%) delivered in Europe was trading between $1.15 and $1.20 a pound in Europe on April 4, according to data by Metal-Pages. In the United States, it was trading between $1.17 and $1.21 a pound. Prices in both regions were above what they were trading between November and March.

“We maintain that prices should average around $1.27 per pound for the year compared to $1.25 per pound in 2011,” Core Consultants’ Lara Smith said. “We believe that 2013-2015 will bring about a surplus market owing to expanded ferrochrome capacity in China outpacing capacity additions in the stainless steel market, coupled with declining stainless steel production expected in Europe.”

Smith sees stainless steel capacity utilization at about 80 percent in 2016 compared to the current 73 percent, with stainless steel output at 39.8 million tonnes. “Consequently we expect a deficit ferrochrome market and an improvement in prices to $1.32 to $1.35 per pound on the back of higher demand from the stainless steel industry.”

According to Smith, the ferrochrome market will remain in surplus until 2015, experiencing brief periods of undersupply. “In 2012, we expect this deficit to increase to 76,000 tonnes, following production cut-backs in South Africa and increased buying from Europe as a result of increased liquidity. Moreover Japanese reconstruction efforts are expected to get underway in the second half of the year which will improve demand for ferrochrome and stainless steel goods.”

Securities Disclosure: I, Karan Kumar, hold no direct investment interest in any company mentioned in this article.