NSSC Agrees to Pay 19% More for FeCr in January-March

Nippon Steel & Sumikin Stainless Steel (NSSC) agreed with ferrochrome suppliers of South Africa to increase the ferrochrome purchase price by 19.4% for January-March shipment from October-December. NSSC finally accepted the record high price after European stainless makers settled the negotiation in December. The hike represents all time high 8,900 yen per tonne of cost up for stainless products with 18% chrome. NSSC tries to pass the higher cost on the selling price through alloy link price mechanism, which the firm introduced for chrome series stainless cold rolled flat steel for January order as nickel series products. The new price is CIF US$ 1.29 per pound of chrome, which represents 158,100 yen per tonne for ferrochrome with 52% chrome and is US$ 0.21 higher than October-December price. The hike is widest compared with US$ 0.18 hike for July-September 2007 though the percentage is lower than 20% for July-September 2007 and 28% for July-September 1995. The new price is 55.4% higher than a year ago and 90% higher than 2 years ago. The ferrochrome suppliers compromised to keep the price for October-December when major stainless makers posted loss for July-September due to major output reduction. The price jumped after the temporary pause. The suppliers sought US$ 0.3 per pound hike citing tight supply and higher cost for coke and freight under weak dollar. After European stainless makers agreed for the wide hike, NSSC resisted the hike when Asian stainless market is still recovering phase. However, NSSC finally accepted the hike to secure materials stably. The spot market price is around US$ 1.7 per pound under tight supply when China increases the import. The tight supply could lift the price level more for April-June depending on the condition.