Analysis of Trends in the Ferrochrome & Stainless Steel Industry

Core Consultants’ Second Quarter Analysis of Trends in the Ferrochrome & Stainless Steel Industry

Published by Ferroalloynet.Com
Steven Zhao, Manager
China Ferroalloy Market
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Writer , Lara Smith, Managing DirectorAuthored by Core Consultants
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Table of Contents

Table of Contents
1. Macroeconomic Review 8
1.1 America 8
1.2 Asia 12
1.3 Europe 17
2. Quarterly Ferrochrome Trends 21
2.1 Ferrochrome Consumption 21
2.2 Ferrochrome Production 24
2.3 Ferrochrome Prices 28
2.4 Trade of Chrome Ore 30
2.5 Trade of Ferrochrome 31
3. Quarterly Stainless Steel Trends 33
3.1 Stainless Steel Scrap 33
3.2 Stainless Steel Consumption 35
4. Longer Term Outlook 41
4.1 Ferrochrome requirement to support Stainless Steel production 41
4.1.1 Capacity Additions 42
4.2. Ferrochrome Production Outlook 46
4.2.1 Capacity Additions 46
4.3 Ferrochrome Cost Analysis 52
4.3.1 Exchange Rates 54
4.3.2 Reductants 55
4.3.3 Energy Costs 57
4.3.4 Ore Prices 59
4.5 Long Term Ferrochrome Price Outlook 61
4.5.1 Five year Forecast to 2015 61
4.5.2 Ten Year Price Forecast 62
5.  Chrome Ore Markets 63
5.1 Chrome Ore Production 63
5.1.1 Capacity Additions 64
5.1.2 Perspective of UG2 Chrome Ore Potential 67
6. Appendix 68
7. Acknowledgment and References 69

List of Charts
Chart 1: Ferrochrome Outlook Summary 3
Chart 2: US Unemployment Rate 10
Chart 3: US Purchasers’ Management Index 10
Chart 4: China's GDP Factors 15
Chart 5: HICP Inflation 19
Chart 6: HC-FeCr Contract Price 19
Chart 7: Wuxi Market 22
Chart 8: Foshan Market 22
Chart 9: Chrome Ore Inventory at Chinese Ports 26
Chart 10: HC-FeCr Contract Prices 28
Chart 11: HC-FeCr Spot Prices 28
Chart 12: HC-FeCr Rand/Tonne Equivalent 28
Chart 13: Spot vs Contract 28
Chart 14: Total Chinese Chrome Ore Imports 30
Chart 15: South African Exports of Chrome Ore 30
Chart 16: Chinese Net Import of Ferrochrome 31
Chart 17: South African Ferrochrome Exports 31
Chart 18: Chinese Scrap Import 33
Chart 19: Scrap Prices 33
Chart 20: China White Goods Domestic Shipment 36
Chart 21: China Stainless Steel Consumption by End Use 37
Chart 22: US Weighted IP Index 38
Chart 23: US Motor Vehicle Assemblies 38
Chart 24: European Stainless Steel Consumption Index 39
Chart 25: Stainless Steel Production Outlook 41
Chart 26: Attributable Growth in Stainless Steel Production 41
Chart 27: Expected Stainless Steel Capacity Changes 45
Chart 28: Total FeCr Capacity Additions Until 2015 50
Chart 29: Long Term Ferrochrome Capacity 51
Chart 30: Ferrochrome Cost Estimation 52
Chart 31: Attributable Growth of Costs 52
Chart 32: Chrome Exporters’ Currency vs USD 54
Chart 33: Chinese Exported Met. Coke Prices 55
Chart 34: Chinese Domestic Met. Coke Prices 55
Chart 35: Eskom Prices 57
Chart 36: Comparison of Electricity Tariffs 57
Chart 37: Price of Imported Chrome Ore to China 59
Chart 38: Offshore Quotations of Turkish Chrome Ore 59
Chart 39: Offshore Quotations of African Chrome Ore (S. Africa & Zimbabwe) 59
Chart 40: Offshore Quotations of Indian Chrome Ore 59
Chart 41: Long Term Ferrochrome Outlook 61
Chart 42: Expected Chrome Ore Capacity Changes 66
Chart 43: UG2 Reserves 67
Chart 44: UG 2 Chrome Ore Supply 67

List of Tables
Table 1: GDP Growth and Forecasts 8
Table 2: Quarterly Stainless Steel Production 21
Table 3: Quarterly Ferrochrome Consumption 22
Table 4: Quarterly Ferrochrome Production 24
Table 5: Quarterly Stainless Steel Consumption 35
Table 6: Status of stainless steel melt expansions 42
Table 7: Ferrochrome Consumption Requirement 45
Table 8: Status of ferrochrome plant expansions 46
Table 9: Ferrochrome Outlook 52
Table 10: Long Term Ferrochrome Price Estimate 62
Table 11: Chrome ore production (1993-2010) 63
Table 12: Chrome ore production (1993-2010) 63
Table 13: Status of chrome ore expansions 64
 
2. Quarterly Ferrochrome Trends
2.1 Ferrochrome Consumption

Approximately 80% of chrome ore produced is consumed by the stainless steel industry- thus the success of the ferrochrome market is heavily reliant on stainless steel. Therefore, in order to assess the level of ferrochrome demand, we must consider the outlook for stainless steel production. We use the relationship that approximately 1 tonne of HC-Ferrochrome is used to produce 4.2 tonnes of stainless steel . This relationship between steel and ferrochrome serves as a gauge in determining ferrochrome demand.