Chinese Ferro Alloy Exports Get The Stick

At the end of September, S Korean ferro alloy producers informed the Korean Trade Commission that they simply cannot compete against Chinese low priced imports.

Korea had imported around 81,000 tonnes of Chinese manganese alloys in 1995, but in 1996, imports shot up to 123,000 tonnes.

Due to large scale imports, the capacity working of the ferro alloy industry in S Korea had fallen from 78% in 1995 to 62 per cent in 1997.

China which produces about 2 million tonnes of manganese alloys per year, finds them a surfeit and resorts to large exports, particularly silico manganese.

The silico manganese exports attract dumping duty in Japan, the US and recently the EU has imposed a 19.6% preliminary anti dumping duty on Chinese silico manganese into Europe.

 

There is the apprehension that the S Korean move will drive the Chinese exporters to desperation and they will sell their wares at much lower prices to other countries.This will further destabilise the world market. China exports silico manganese at around $ 440-450 per tonne FOB China, with 65% Mn and 17% SI.

It is selling ferro manganese of 75% Mn at around $ 440-450 per tonne and the lower grade material at $405.

The S. Korean action may take a few months before becoming a reality

The local steel producers pay a higher price for the domestic ferro alloy and want low priced imports to compete in the world market for their steel items.

Therefore whether the dumping duty will be imposed remains to be seen.

Impact on India: A part of the Chinese silico manganese, ferro manganese production may find its way into India.

The quality problems which the earlier exports posed are no longer valid as the Chinese do produce ferro alloys of international quality.

Therefore the Indian steel producers may find it attractive to buy a portion of their ferro alloys from China.

Vizag Steel plant has already made a practice of importing part of its requirements of silico manganese and Bhilai steel plant is also likely to follow suit.

Indian ferro alloy producers would like to initiate anti dumping proceedings against imports of cheap ferro alloys from foreign countries.

Ironically, when they export their own product the price is much lower than the domestic price.

Chrome ore imports into China: China is likely to import about one million tonnes of chrome ore during the year 1997, exceeding the 765,000 tonnes imported in 1996.

During Jan-Aug 1997, imports of chrome ore to China were 715,000 tonnes, almost equal to last calendar year imports.

The largest supplier was India with 326,000 tonnes against 297,000 tonnes in 1996. Iran supplied 125,000 tonnes, Turkey 50,000 tonnes, S. Africa 86,000 tonnes, Pakistan 35,000 tonnes.

The largest imports of chrome ore by China were in 1995 when nearly 1.4 million tonnes were brought in.

Then the prices of FeCr started falling in the world market. A large part of the chrome ore is being consumed for domestic consumption and exports are marginal.

The prices of chrome ore supplied in 1997 averaged for high grade fine ore from India at USD 140-145 CIF and Turkish high grade lumpy $ 133 CIF.

Prices are now falling as the FeCr market is not improving.

The October-December 1997 FeCr prices are likely to be rolled over from the previous quarter between 47-48 cents per pound of chromium CIF.

The spot prices are slightly lower and may remain weak. But there is hope of the stainless steel market picking up and there may be some rise in the spot market.