Charge chrome contract prices rollover

摘要

Negotiations for first quarter charge chrome contracts have been settled in all regions, with the contract price remaining at roughly 33 cents/lb on a delivered basis. Prices rolled over despite the continued strength in demand, tight availability of scrap, low producer stocks and a significant appreciation in the South African Rand. Taking these factors into account, one has to ask why an increase was not obtained when it appears that producers could have easily justified it. Anecdotal evidence suggests that after achieving a second 3 cents/lb price rise in the fourth quarter of 2002, ferrochrome producers settled contract volumes for the first quarter of 2002 at the same time and at the same price. Hence, it now appears that the charge chrome producers somewhat underestimated the market and, as a result, missed the opportunity to further increase the contract price.. Furthermore, at the beginning of the fourth quarter last year, South African producers did not anticipate that the Rand would appreciate by approximately 15 percent in three months, thereby increasing their production costs by around 15-20 percent. Now, in order to regain their position, various producers expect that prices will need to rise by between 3-9 cents/lb in the second quarter of 2003.