FERROALLOYS

Vitaly GNATUSH, expert with DerzhZovnishInform

Ukraine

Ukrainian ferroalloy producers and traders finished the first half of 2000 with rather favorable operation performance results. Analysis of the current state of Ukrainian ferroalloy production, consumption, and export (see table 1) indicates some recovery in comparison with the last year’s figures, despite the volatile economy of the country. In general, the second half of the year is promising for domestic producers and traders. So far, only the problems of the Ukrainian power market prevent producers from fulfilling all the incoming orders. The latest information indicates that enterprises could raise monthly output by approximately 20-30 thousand tonnes.

The fact that during the first 6 months of 2000 the world economy saw an upward development also contributed to successful trade in Ukraine-made ferroalloys. The IISI data imply that 63 countries produced 373,400,000 tonnes of steel or 98% of the worldwide output with an 11.1% output increment registered against the last year’s corresponding figure. Steel output growth ranged from 2.1% in Africa to 21.4% in the CIS, while Oceania reported a 1.3% decrease.

According to the information with Metallurgprom Association, Ukrainian ferroalloy mills (namely, Nikopol, Zaporozhye, and Stakhanov Ferroalloy Works) collectively manufactured approximately 602,000 tonnes of ferroalloys in January-June 2000 (see table 2), exceeding the last year’s performance by 27%.

It ought to be highlighted that notwithstanding the current unstable situation in the Ukrainian power sector, the ferroalloy industry has been steadily increasing production throughout 2000. That is why it is logical that the first 6 months of the present year saw a 45.4% rise in physical export of ferroalloys compared to the corresponding 1999 figure, to come to 110.2% of the last year’s July-December ferroalloy export (see figure 1).

According to preliminary data with the Ukrainian Customs Service, in January-June 2000 ferroalloy export from Ukraine amounted to approximately 373,600 tonnes worth some US$154,900,000.

Analysis of monthly supplies indicates that over the period of January 1999 – June 2000, increment of average monthly export was about 12%. This evidences stable operation of the Ukrainian enterprises, as well as good adjustment of the system of Ukrainian ferroalloy exports and high competitiveness of Ukraine-made commodities.

Distribution of export stabilized in a way. Manganese ferroalloys accounted for approximately 78.1% of the total ferroalloy export, including 52.9% taken by ferrosilicomanganese and 25.2% by ferromanganese. Ferrosilicon contributed around 20.0% to total export supplies.

Table 1. Ukrainian ferroalloy market

Table 2. Ferroalloy output in Ukraine in 1999-2000

Source: Metallurgprom assn.

By-region distribution of Ukrainian ferroalloy exports remains vast, although there still are some opportunities for further expansion. Currently, 31 countries from four continents purchase ferroalloys from Ukraine. Only South American and Oceanean countries, as well as Australia, are not in the sphere of Ukraine’s interests.

Ferroalloy export by regions of the world shows that CIS countries were the primary consumers of Ukrainian ferroalloys accounting for 49.3% of the total Ukrainian export of these commodities (see table 3).

Asian countries ranked the second with 24.4% and East-European countries had 13.2% of Ukrainian ferroalloy exports. Among the CIS countries, the Russian Federation was a traditional and uncontestable leader. Over the first six months of 2000, Russia imported approximately 177,600 tonnes of ferroalloys from Ukraine, including 82,300 tonnes of ferrosilicomanganese (51.8% of the total Ukrainian ferroalloy exports to the RF), 71,600 tonnes of ferromanganese (45.1%), and 4,400 tonnes of ferrosilicon (2.8%). It must be noted that, throughout 1999-2000, export dynamics of Ukrainian manganese-based ferroalloys shows an upward development (see figure 2). Average monthly export of these ferroalloys gained approximately 17% during this period.

Over the first half of 2000, export of silicomanganese to Russia went 1.8 times up against the last year’s corresponding figure, that of ferrosilicon increased 2.6 times, and that of ferromanganese gained 2.9 times.

Asian countries are the second in terms of consumption of Ukrainian ferroalloys, with 24.4% of the total Ukrainian ferroalloy export. South Korea with 17,600 tonnes and Turkey with 59,600 tonnes are the regular markets for Ukraine-made ferroalloys. Silicomanganese accounted for 66.8% of all supplies to this region and ferrosilicon had 33.2%.

East European countries import 12.3% of exportable Ukrainian ferroalloys. Out of this quantity, ferrosilicon made up 46.6%, silicomanganese 28.0%, and ferromanganese approximately 25.2%.

Table 3. Ferroalloy exports from Ukraine in 1999-2000 (‘000 tonnes)

Distribution of Ukrainian ferroalloy exports in the first half of 2000 differs from that in 1999 (see table 4). It is remarkable that ferrosilicomanganese’s share reduced 1.08 times and that of ferromanganese increased 1.2 times against the last year.

Ukrainian base ferroalloys enjoy rather stable demand worldwide.

Ferrosilicomanganese has been exported to 20 countries this year. Mostly, it was supplied to CIS member-states (45.9% of the total) and Asian countries (30.8%). The primary consumers of this commodity were Russia (82,300 tonnes), Turkey (41,800 tonnes), South Korea (17,600 tonnes), Canada (10,400 tonnes), and Poland (8,700 tonnes). It is worth highlighting that average monthly ferrosilicomanganese export exceeded the last year’s figure by some 15%.

Ferromanganese was largely supplied to CIS member-states (86.5% of the total) and East European countries (13.3%). Among these countries, Russia was out of contest with 71,600 tonnes or 76.2% of the total figure, followed by Romania (10,200 tonnes) and Kazakhstan (around 6,400 tonnes). Average monthly ferromanganese export added about 53% against the 1999 figure.

Ferrosilicon was exported to Asian states (40.5% of the total) and East European countries (30.9%). The most prominent consumers among importing countries were Turkey (17,700 tonnes), the USA (6,500 tonnes), and Romania (around 5,900 tonnes). Among the CIS member-states, Belarus purchased 4,800 tonnes of Ukraine-made ferrosilicon, whereas Russia somewhat increased its ferrosilicon consumption to 4,000 tonnes towards the end of the first half-year. On the whole, average monthly ferrosilicon export was roughly 21% higher than that in the last year’s respective period.

Russia purchased an insignificant quantity of Ukrainian ferrochromium (8.2 tonnes).

The range of light ferroalloys exported from Ukraine is rather wide. These include ferronickel, ferromolybdenum, ferrotungsten, ferrotitanium, ferrovanadium, and ferroniobium.

Out of these alloys, the following ones enjoyed the greatest consumption: 5,300 tonnes of ferronickel, around 1,300 tonnes of ferrotitanium, and 50 tonnes of ferromolybdenum. Destinations of Ukrainian light ferroalloys were rather extensive in the first six months of 2000, namely, 11 countries imported these products from Ukraine.

Out of the total quantity of light ferroalloys exported (7,000 tonnes), the leaders were ferronickel (75.6% of the total) and ferrotitanium (18.5%). Ferronickel was mainly exported to EU member-states and the Baltic States (approximately 2,600 tonnes to each, collectively accounting for 99.8% of this commodity’s export).

The largest consumers of ferronickel were Germany (around 2,300 tonnes) and Estonia (2,400 tonnes). Ferrotitanium was primarily exported to Russia (700 tonnes), the Netherlands (around 200 tonnes), and the USA (100 tonnes), which sums up to 86.0% of the total Ukrainian export of this ferroalloy.

Over the first six months of 2000, Ukraine imported around 16,100 tonnes of ferroalloys spending US$15,800,000.

14 countries supplied ferroalloys to Ukraine in the period under review. These were Belgium, Hungary, Germany, Georgia, Kazakhstan, Latvia, Macedonia, the Netherlands, Russia, Singapore, Slovakia, Slovenia, Sweden, and Estonia.

Table 4. Pattern of Ukrainian ferroalloy exports (% of the total)

Ukraine imported the largest quantities from Latvia (around 9,600 tonnes), Russia (3,000 tonnes), Georgia (1,400 tonnes), Germany (600 tonnes), and the Netherlands (700 tonnes). These figures collectively come to 95.1% of the total Ukrainian ferroalloy import. Among ferroalloys purchased by Ukraine, ferrochromium and ferrosilicon prevailed with 9,400 tonnes or 58.1% and 3,300 tonnes or 20.3% respectively. Light ferroalloys, i.e. ferromolybdenum, ferrotungsten, ferrotitanium, ferrovanadium, ferroniobium, ferrophosphorus, and others, accounted for 1,786.8 tonnes or 11.1% of the total ferroalloy import. Average monthly import of light ferroalloys amounted to some 290 tonnes.

Global market

The world market for ferroalloys remained rather stable in January-June 2000 (see table 5), and, judging by all the factors, no weighty changes in quotations are expected in the third quarter.

The American market for silicomanganese continues to permanently keep up rather high prices, surpassing the 1999 level by roughly 16%. However, an 0.6% monthly price slide has been registered over the past 5 months. As of the second decade of July, price for silicomanganese amounted to US$/tonne 551-562 ex-warehouse Pittsburgh. Prices on the European markets have been stable at DM/tonne 990-1,020 since mid-March 2000, thus exceeding the 1999 figure by approximately 25%. Under pressure of Chinese producers, the Asian silicomanganese market settled at US$/tonne 385-395 FOB in the first half of 2000.

The market for ferromanganese indicated a rather ambiguous situation in January-June. Starting mid-March 2000, price for ferromanganese, up to 7.5% carbon content, set at DM/tonne 860-900 on the European market and currently remains on this level. Against the 1999 figure, the price has added some 23%. Price for high-carbon ferromanganese on the US market was gradually gaining some 1.4% every month during this period to reach US$/lt 490-510. Compared to the 1999 level, prices were some 12% higher, as of July 2000.

Table 5. Average world prices for base ferroalloys

Sources: MBR Ferro-alloys Monthly, Metal Bulletin

From March till July, European prices for ferrosilicon kept at DM/tonne 1,100-1,150, against the January average of DM/tonne 1,200. In comparison with the 1999 figure, the decrease is insignificant and does not exceed 1%. The American market for imported ferrosilicon has stable prices. As of the second decade of July, prices there remained at US$/lb. 0.35-0.375 against the 1999 average of US$/lb. 0.40.

The market for ferrochromium continues being active in the present year. Positive demand of stainless steel makers has produced an upward trend in ferrochromium prices. The situation is especially favorable in Europe. Prices for high-carbon ferrochromium gained the maximum of US$0.05 per lb. Cr against the 1999 average price, to settle at US$0.41-0.43 per lb. Cr in July. No important changes are traced on the American and Asian markets. Slight recovery is observed on the American market for high-carbon ferrochromium, notably, the prices have added 14% against the corresponding period of 1999.

Reuters informs that ferrochromium traders are currently considering whether to switch from quarterly to six-month contracts. It is believed that this step will be beneficial for both the sellers and the buyers, because this measure aims at narrowing ferrochromium price fluctuations and the resulting market stability. There have been launched negotiations on agreeing the prices for ferrochromium for the 4th quarter of 2000 (the base level is US$0.43 per lb. Cr with possible rise to US$ 0.45 per lb. Cr).

In general, the world market for light ferroalloys is rather dynamic and indicates a number of standard trends (see table 6).

In March-July, the ferrotitanium market was quite dynamic indicating a downward price behavior. Compared to the average 1999 price for 70% ferrotitanium, the one registered in January 2000 went up 1.6 times. In the consecutive months, prices were gradually going down to reach US$3.20-3.30 per kg Ti in July, approximately 9% higher than the corresponding 1999 figure. It is reasonable to expect the situation to stabilize in the second half of the 3rd quarter, while it is the 4th quarter when prices are likely to grow.

Table 6. Average prices at the world market for light ferroalloys

Sources: MBR Ferro-alloys Monthly, Metal Bulletin.

The European ferrovanadium market is unstable although featuring a recovery trend in 2000. In the report period, the highest price for ferrovanadium was registered in March, when the average low and high were US$12.58 and US$13.20 per kg V respectively. In the following months, prices for ferrovanadium rapidly decreased 20-23%, and reached US$10.40-10.77 per kg V in July 2000. After the January 2000 drop to US$4.3 per lb. V, the American market was slowly, but firmly stimulating the price growth (on average gaining US$0.3-0.4 per lb. V every month) to top out in March. Further on, the American market more or less mirrored the situation on the European market, although it was less dynamic. In March-June, prices lowered 2-3% to US$ 5.50-5.88 per kg V.

The global ferrotungsten market has been stable enough in 2000. After staying at US$5.60-5.80 per kg W for quite a long time, in June-July prices slowly slid to US$5.50-5.80 per kg W, approximately 3% below the 1999 average. The Asian ferrotungsten market reflected this trend, namely, prices there reduced by 1-3% to come to US$5.40-5.55 per kg W.

Among the light ferroalloys selected, ferromolybdenum was the most stable one on the global market in January-May. However, a growth trend became prominent in June-July, and the European prices began to slowly go up adding 2-3% every month. As of the second decade of July, prices for 65-70% Mo were around within US$7.45-7.65 per kg Mo and those for 60% Mo were US$6.93-7.05 per kg Mo. The difference between the current average price and the 1999 average narrowed from 5% to 1%. Prices on the US market also rose in July coming to 99% of the 1999 average annual level.

At the same time, traders believe that, notwithstanding high demand, the ferromolybdenum market strives to equilibrium, and there will be no major price changes. According to Reuters, it is only the lowering of Chinese molybdenum-concentrate exports that can produce growth of ferromolybdenum price.

The statistics on the global output of stainless, high-speed, tool, and other alloy steels in the 1st quarter of 2000 are auspicious. According to Ferro-alloy Monthly, outputs gained from 2.5% to 6.3% against the 1st Q of 1999 depending on steel type.

All the mentioned facts indicate that the situation on the markets for ferroalloys and alloy steels is rather stable and has favorable prospects for the near future.

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