China and India to increase stainless steel and ferrochrome production
Mr Sahit Muja President and CEO of Albanian Minerals forecasts that stainless steel output will rise to 35 million tonnes in 2012 from 32.1 million tonnes in 2011 driven by the growth in China and India
China’s stainless steel output will rise to 15 million tonnes, surging by 8% YoY and India’s stainless steel production is expected to increase to 2.5 million tonnes, jumping by 15% in 2012. The EU’s stainless steel production may reach 7 million tonnes, up by 1.5%; Japan’s would be at 3.5 million tonnes, rising by 3 %; South Korea’s would be at 3.4 million tons, up by 5%.
China, which has the world's largest foreign exchange reserves of USD 3.3 trillion, has been expanding investments on steel, stainless steel and ferrochrome production. Albanian Minerals expects that prices and demand will rise for iron ore, nickel and chrome ore as China is producing 50% of the world's steel.
From 2000 to 2012, China has captured all of the world's growth in ferrochrome, steel and stainless steel production. In 2012, China's total steel production is on pace to be as much as 700 million tonnes per year, accounting for near 50% of global steel production. This unparalleled expansion is the result of massive government intervention and huge demand for steel in China.
The price of Chinese 316 stainless coil rose to USD 4,800 per tonne. The price of Chinese 304 stainless coil at of USD 2,800 per tonne. The Chinese ferrochrome prices remained stable this week. Chinese stainless steel mills and traders are refusing to purchases high carbon ferrochrome due to the huge price gap between imports and the Chinese local market.
According to Chinese customs data, ferrochrome imports in May 2012 reached just 105,747 tonnes, down by 8.6% MoM and 40.8% YoY lower. The Chinese stainless steel mills are buying from the local markets to support the ferrochrome industry in China.
Ferrochrome local prices are cheaper as compared with imports. The ferrochrome alloy is a key ingredient in manufacturing stainless steel giving it strength, weight, rust protection and it's characteristically muted shine.
China having no chrome reserves of its own to produce ferrochrome. China has accelerated its imports of chrome ore from India, South Africa, Turkey, Iran, Albania and Oman so they could produce their own ferrochrome.
Indian exports of the chrome ore has drop to a minimum as the country has implemented export taxes on the chrome ore. India's chrome ore exports dropped from 1.2 million tonnes in 2008 to 440,000 tonnes in 2011.
Indian ferrochrome production increased from 634,000 tonnes to 1,025,000 tonnes per year, 26% of which is exported to China at a much better price than selling chrome ore. That left Chinese ferrochrome producers with no choice but to source the chrome ore from South Africa, Turkey, Albania, Iran and Oman. South Africa has 80% of the world's chrome reserves.
The chrome ore exported to China has since increased from 150,000 tonnes per year in 2000 to 5 million tonnes in 2011. This has enabled China to build up its own ferrochrome production to 2.7 million tonnes in 2012. Because of this, South Africa's share of the global ferrochrome market has now fallen from 51% in 2001 to 35% in 2012.
Ferrochrome production in South Africa, the biggest maker of the metal used to make stainless steel, is being displaced by China, which imports 100% percent of chrome ore. South African chrome ore exports to China increased 51% to about 4.7 million tonnes in 2011.
South African ferrochrome output declined 9 percent, or about 309,000 tonnes, to 3.28 million tonnes in 2011, while Chinese production rose by 13% to 2.5 million tonnes. This decline is likely to continue this year while China will have grown its share of ferrochrome production from 4% in 2000 to 40%, in 2012 using exported chrome ore.
China is in pursuit of their national interest, the Chinese are also making sure that ferrochrome does not easily leave their shores. They have added an export tax on ferrochrome.
Source - Examiner