FERROALLOYS

FERROALLOYS

Vitaly GNATUSH, expert with DerzhZovnishInform

UKRAINE

In 2000, Ukrainian ferroalloy production, consumption, and
exports featured noteworthy augmentation of the average monthly figures against the year
1999: ferroalloy output and exports grew 1.3 times, while domestic consumption increased
1.5 times.

Lucrative trade in Ukrainian ferroalloys was greatly
stimulated by positive trends in the global economy. According to the data with the
International Iron-&-Steel Institute (IISI), 63 countries worldwide produced 760.4
mln. tons of steel in the first 11 months of 2000, making up 98% of the global output. At
the same time, the average growth totaled 8.0%, as compared to the same period of 1999,
while the regional augmentation of steel output fluctuated from 2.7% (Oceania) to 16.2%
(the CIS member states).

The data with the Ukrainian Ferroalloy Association (UkrFA)
show that Ukrainian ferroalloy works (Nikopol, Zaporozhye, and Stakhanov) together with
Kramatorsk Metallurgic Plant produced some 1,309.3 ths. tons of ferroalloys within
January-November 2000 (see table 1), thus, accounting for 133% against the respective
period of 1999.

Table 1. Ferroalloy output in Ukraine (ths. tons)

* Source: the Ukrainian Ferroalloy Association

Besides, favorable economic situation on the ferroalloy
market boosted natural ferroalloy exports 1.4 times, compared to the respective period of
1999 (chart 1).

Chart 1. Dynamics of Ukrainian ferroalloys exports in
1999-2000.

According to the latest estimates with the State Customs
Service of Ukraine, in January-November 1999 exports of Ukrainian ferroalloys totaled
approximately 747.9 ths. tons worth some USD 313.1 mln.

Along with this, the pattern of Ukrainian ferroalloy
exports remained quite stable: manganese ferroalloys including ferrosilicomanganese
(55.2%) and ferromanganese (23.5%) made up 78.7% of the total ferroalloy exports.
Ferrosilicon accounted for 19.6% of the total exports, while the portion of low-tonnage
ferroalloys amounted to some 1.7%.

During the first 11 months of 2000, geographic distribution
of Ukrainian ferroalloy exports was comparatively broad: 35 countries representing 4
continents (save for the South America, Oceania, and Australia) purchased Ukrainian
ferroalloys. Regional distribution of Ukrainian exports shows that the CIS countries
became the major consumers of Ukrainian ferroalloys accounting for 47.7% of the total
exports (chart 2).

Figure 2. Regional distribution of Ukrainian
ferroalloy exports in 1999-2000.

The Russian Federation was the indisputable leader among
the CIS member states importing some 303.1 ths. tons of Ukrainian ferroalloys in the first
11 months of 2000. Ferrosilicomanganese accounted for 53.8% of the Russian-bound supplies,
ferromanganese – 40.9%, and ferrosilicon – 5.0% of the total exports.

Asian countries became the second largest consumer of
Ukrainian ferroalloys making up 26.3% of the total export supplies. South Korea (49.3 ths.
tons) and Turkey (113.4 ths. tons) remain the traditional markets for Ukrainian
commodities in this region. Silicomanganese contributes 72.5% and ferrosilicon accounts
for 26.9% of the total ferroalloy exports to Asian countries.

East European countries rank the third in export turnover
of Ukrainian ferroalloys making up 12.9% of the total. The portion of ferrosilicon amounts
to 45.4%, ferrosilicomanganese accounts for 26.7%, and ferromanganese contributes 27.3% to
the total exports.

The first 11 months of 2000 saw the following distribution
of the Ukrainian exports of base ferroalloys.

In 2000, ferrosilicomanganese was supplied to 21 countries
worldwide. CIS member states and Asian countries became the leading importers of Ukrainian
ferrosilicomanganese accounting for 44.5% and 34.5% of the total exports respectively. The
five largest consumers of this commodity were the Russian Federation (163.2 ths tons),
Turkey (83.4 ths. tons), South Korea (49.3 ths. tons), Canada (17.6 ths. tons), and Egypt
(16.9 ths. tons). It should be noted that average monthly exports of ferrosilicomanganese
exceeded the 1999’ figures by 32%.

During the period under review, ferromanganese was supplied
to 15 countries worldwide, whereas the CIS countries (81.8% of the total export supplies)
and Eastern Europe (14.9%) remained its largest importers. Speaking of distribution by
countries, Russia spurred up to become the leading importer of this commodity (123.9 ths.
tons making up 70.7% of the total) and was followed by Romania (22.1 ths. tons) and
Kazakhstan (12.3 ths. tons). The average monthly exports of ferromanganese featured 56%
augmentation against the 1999’ figures.

Ferrosilicon was exported to Asian countries (36.1% of the
total), Eastern Europe (30.2%), and the CIS member states (19.6%). Turkey (28.7 ths.
tons), Russia (15.0 ths. tons), the USA (12.1 ths. tons), and Romania (14.1 ths. tons)
were notable for the largest amount of imported ferrosilicon among 25 countries that
consume this commodity. On the whole, average monthly exports of ferrosilicon grew by 30%,
as compared to the 1999’ figures.

Insignificant amounts of ferrochromium were supplied to
Russia (22.2 tons).

The range of low-tonnage ferroalloys exported from Ukraine
to 13 countries worldwide was quite broad and embraced ferronickel, ferromolybdenum,
ferrotungsten, ferrotitanium, ferrovanadium, and ferroniobium. Ferronickel (58.5%) and
ferrotitanium (14.2%) contributed the most to the total exports of low-tonnage
ferroalloys, which amounted to 13.3 thousand tons. For the most part, ferronickel was
supplied to the EU and Baltic States. Germany and Estonia were the major consumers of
ferronickel. The largest portion of exported ferrotitanium was bound to Russia, the
Netherlands, and the USA.

In the first 11 months of 2000, Ukrainian imports of
ferroalloys totaled 33.9 ths. tons worth USD 35.1 mln. During the reported period, 23
European and Asian countries supplied their ferroalloys to Ukraine. Latvia, Russia, the
Netherlands, Georgia, and Germany became the leading suppliers of ferroalloys accounting
for 91.0% of the total imports. Ferrochromium (59.2%), ferrosilicon (18.6%), and
ferromanganese (8.5%) contributed the most to the total Ukrainian imports of ferroalloys.
Along with this, low-tonnage ferroalloys (ferromolybdenum, ferrotungsten, ferrotitanium,
ferrovanadium, ferroniobium, ferrophosphorus, etc.) make up 13.6% of the total imports.

RUSSIA

According to the data with Interfax agency and the State
Statistics Committee of Russia, in the first 11 months of 2000 Russian ferroalloy
producers boosted ferroalloy output by 8.3% against the respective period of 1999. At the
same time, the conducted analysis showed that ferroalloy output in November 1999 dropped
by approximately 5.6% against the average monthly output in 2000. Table 2 contains data on
results obtained by certain ferroalloy producers from Russia.

Table 2. Ferroalloy output in Russia in the first 11
months of 2000 (ths. tons)

Interfax agency informed that according to representative
of JSC Chelyabinsk EMW, ferroalloys produced by JSC Nikopol Ferroalloy Works entered the
Russian market for ferroalloys and plummeted demand for this commodity. Besides, Ukrainian
ferroalloys are commonly perceived as a commodity that is being sold at dumping prices,
which are 20% lower than those set by Chelyabinsk EMW. At the same time, commenting its
price policy, management of Chelyabinsk EMW admits that prices for ferroalloys can not be
cut down because of a twofold increase in prices for electric power, which accounts for
almost 70% in the manufacturing cost of ferroalloys, in the beginning of 2000.

The whole situation is quite similar to what had happened
to the exports of Ukraine-made steel tubes, which provoked antidumping investigation
initiated by Russia.

GLOBAL MARKET

In 2000, price situation on global market for base
ferroalloys remained quite transparent (table 3).

After price recovery registered in October 1999 (up to
DEM/t 1,200-1,240), European market for ferrosilicon witnessed downward tendency that led
to subsequent price cutback down to DEM/t 1,080-1,100 in December 2000, which corresponds
to the figures reported in June 1999. According to the data with MBR, in December 2000,
European traders were dealing with prices close to DEM/t 1,100 (USD/t 495). Since
mid-September till mid-December 2000, prices set on the American market for imported
ferrosilicon, up to 75% silicon content, featured no serious fluctuations and remained at
USD/pound 0.34-0.35. Prices on this market are considered to have already reached their
critical level. Since the first 11 months of 2000 saw a 9.2% augmentation of crude steel
output in the USA, price forecasting on this market seems to be quite complicated.

In December 2000, prices for China-made ferrosilicon sold
on Asian market amounted to USD/t 490-510 FOB China or USD/t 520-530 CIF Japan. According
to the MBR estimates, comparatively low prices settled on Japanese market were stipulated
by existing surplus of Chinese-made ferrosilicon even despite the fact that in the first
10 months of 2000 ferrosilicon imports grew by 12% against the respective period of 1999
and amounted to 401.7 ths. tons. It is worth mentioning that share of China-made
ferrosilicon on Japanese market rose from 48% in 1999 to 62% in 2000. Besides to China,
Russia and Kazakhstan were notable for their active behavior on Japanese market as well.
Nevertheless, China’s pressure stipulated 16% reduction of Russian exports (down to 51.7
ths. tons) and slashed exports from Kazakhstan by 75%.

In the fourth quarter of 2000, European market for
ferromanganese, up to 7.5% carbon content, remained quite stable. In mid-October 2000,
prices amounted to DEM/t 980-1,000 (USD/t 440-450). Along with this, average prices
exceeded the average annual price reported in 1999 by 38%. The initial prices in 2001 are
expected to be greatly affected by rate of the euro currency. Current recovery of euro
rate can hamper European exports of ferromanganese and, therefore, result in certain drop
of prices. Since the beginning of the second decade of December 2000, prices for
high-carbon ferromanganese offered on the American market fluctuate within USD/lt 470-490.
As for December 2000, prices on Asian market remain within USD/t 400-410. Comparatively
balanced demand and existing reserves add to stability of Asian market as well.

In December 2000, the European market for silicomanganese
was notable for its high stability. As for mid-December 2000, prices amounted to DEM/t
980-1,000. Prices for silicomanganese on the American market are subject to further
growth: in December prices outscored the November figures by approximately 4% and totaled
USD/t 441-507. In November-December 2000, the Asian market for silicomanganese set prices
within USD/t 400-420 FOB. Chinese sellers of silicomanganese actively press Japanese
market. MBR forecasts a 18.8% augmentation of silicomanganese exports against the 1999’
figures (up to 188 ths. tons compared to 156 ths. tons in 1999), should the current growth
rate be held. In December 2000, price for silicomanganese in Japan reached USD/t 440 CIF.
Along with this, China-made silicomanganese is sold at USD/t 405-420 FOB (MBR’s data).

Table 3. Average monthly prices on global market for
base ferroalloys

Sources: MBR “Ferroalloys Monthly”,
metalbulletin.com

In the fourth quarter of 2000, global market for
ferrochromium remained quite unambiguous. In September-November 2000, European market for
high-carbon ferrochromium enjoyed a good slack but in mid-December prices went down to USD
0.31-0.38 per pound Cr. American market for high-carbon ferrochromium witnessed quite
similar tendencies. In mid-December 2000, prices here fluctuated within USD 0.37-0.40 per
pound Cr. Weakened conjuncture on European and American markets can be explained with
dropped demand of stainless steel producers. Experts with MBR reported the curtailment of
ferrochromium share in the total American imports. According to the data with USGS, in the
first 7 months of 2000, the USA imported 269 ths. tons of high-carbon ferrochromium and
zero tons of low-carbon ferrochromium. At the same time, in 2000 total imports of these
commodities amounted to 368 ths. tons and 25.6 ths. tons respectively. Prices on the Asian
market for high-carbon ferrochromium continued to drift downwards and reached USD
0.31-0.33 per pound Cr in the second decade of December 2000. According to the data with
MBR, India-made ferrochromium was sold at USD 0.34-0.35 per pound Cr CIF Japan, prices for
China-made ferrochromium were equal to USD 0.32-0.34 per pound Cr CIF Japan, while prices
for ferrochromium produced in South Africa reached USD 0.39 per pound Cr CIF Japan. It
should be noted that as for August 2000, reserves of high-carbon ferrochromium stockpiled
in Japan were estimated to reach 135.6 ths. tons, compared to 110.5 ths. tons in 1999.

In general, global market for low-tonnage ferroalloys
remained quite brisk.

In the fourth quarter of 2000, European market for
ferrovanadium retained its tendency towards price curtailment. In the second decade of
December 2000, prices reached the high of USD 7.80-8.15 per kg V. American market is less
dynamic compared to the European one but also supports downward price policy. In December
2000, prices amounted to USD 3.85-4.00 per pound V but later on market seemed to sustain a
pause before subsequent price recovery in 2001.

After long pause embracing entire summer and fall, prices
on the European market for ferrotungsten went on fluctuating within USD 5.50-5.80 per kg W
in December 2000, which was 3% lower, compared to the average price in 1999. Asian market
for ferrotungsten showed its solidarity with Europe and set the price at USD 5.40-5.55 per
kg W that remained unaltered since June 2000.

In December 2000, prices on the European market for
ferromolybdenum reached their absolute minimum in 2000 and amounted to USD 6.35-6.45 per
kg Mo for ferromolybdenum, up to 65-70% molybdenum content, and USD 6.00-6.10 per kg Mo
for ferromolybdenum, up to 60% molybdenum content. In 2000, prices on the American and
Asian markets for ferromolybdenum hit the absolute record-low as well. The American market
for ferromolybdenum set the price for ferromolybdenum, up to 65-70% molybdenum content, at
USD 3.00-3.20 per kg Mo, while the Asian market offered prices at USD 6.00-6.10 per kg Mo
FOB Chinese ports.

Following the downfall started in the end of November 2000,
prices for ferrotitanium on the European market tended to save their strength and, thus,
featured slight recovery during entire December. In the second decade of December 2000,
prices reached the high of USD 3.15-3.35 per kg Ti, which corresponded to the level
achieved in mid-October 2000.

The aforementioned facts prove that current situation on
ferroalloy markets remains unambiguous and to some extent predictable.

Table 4. Ukrainian ferroalloy market (ths. tons).