TAPPED IN – the ores and alloys blog: Another headache for bulk alloys suppliers

It’s been another week of harsh truths for ferro-alloys suppliers.

It’s been another week of harsh truths for ferro-alloys suppliers.

Last Wednesday, Metal Bulletin urged bullish silico-manganese suppliers to be honest with themselves about the prospects for a sustained price increase over the European summer.

By Friday, some of the same players were in agreement.

Consumers reckon they can source material below €800 per tonne again – if the latest offers they’re holding turn into concrete deals – and a producer confirmed similar numbers.

This compares with Metal Bulletin’s quotation of €830-870 per tonne on May 15.

One previously bullish supplier finally conceded the reason why Brazil’s power crisis has not caused tighter availability and higher prices.

“Well, do you know what? I have material, so it’s not tight. There’s too much material,” the supplier told Metal Bulletin, reporting prices across most of the Metal Bulletin range, but reluctantly, nothing at the top.

“My problem is working out how much I can tell you without shooting myself in the face,” he added.

Silico-manganese and ferro-silicon have both been affected by the Brazilian power crisis, which has led to domestic shutdowns in Brazil and a surge in imports, meaning material is being diverted away from Europe.

Indian producers have cut production and scaled back exports to Europe, amid fears that the anti-dumping investigation they face will be concluded against them.

But if there is no fresh spot demand – and plenty of stock – no one notices the squeeze on the supply side.

“I honestly haven’t seen the market this bad, not even in 2008,” a trader told Metal Bulletin.

“I wouldn’t even take material if you paid me to,” he added.

So it’s no surprise that some suppliers, particularly in the USA, have written off the rest of the second quarter – and the third – and are pinning all their hopes on new demand from the steel industry, as far out as the fourth quarter.

So with the silico-manganese mystery settled, Metal Bulletin turned its attention to another confusing story; the real level of Turkish lumpy chrome ore stocks in Turkey’s warehouses.

It’s a rolling conversation that can be compared to the scene in Jane Austen’s Sense & Sensibility, in which the heir to a family fortune starts off earmarking three thousand pounds for his newly hard-up sisters but ends up worn down, by his wife, to a couple of dead pheasants.

As market sources described the “bloodbath” in the Turkish chrome ore market on Friday last week, inventory was pegged as high as half a million tonnes.

By Thursday afternoon, the market had talked it down to 80,000 tonnes.

“It’s just an urban legend that there’s five hundred thousand tonnes of chrome ore in stock,” a supplier told Metal Bulletin.

We’ll be looking into this further over the coming weeks, but we’re already hearing offers for Turkish material below last Friday’s range of $210-220 per tonne.

Meanwhile, this Friday’s pricing session is also shaping up to be bad news for high carbon ferro-chrome suppliers as the latest prices for high quality material, already at 96-99 cents per lb, start to sound suspiciously like the numbers attributed to low grade material a week ago.

Janie Davies 
Twitter: @janiedavies_mb