History is like gravity, it weighs you down

Make change your friend. If anything, that is the message to ferroalloy buyers. Many sellers have comment on why spot business has evaporated in recent years and their explanations are pretty brutal. “The buyers are indifferent, overworked or just lazy.” In the old days, and I am old enough to know the old days personally, many mills bought their ferroalloys on a quarterly basis, mostly at fixed prices. As a result, the buyers had to spend time researching the market, analyzing supply and demand on a micro and marco basis, and making informed forward predictions. It was a full time job.

Now, many buyers either don’t have the time or the willingness to do the elemental research. Instead, they choose to buy annually, so their engagement in the market is not quarterly or event monthly but once a year. As one seller said: “I just get asked what is the discount, and that’s all. No risk and little effort.” I should add this isn’t all buyers, some of which I know do a great deal of market research since they were always bothering me.

It’s understandable considering that the buyers are probably multi-tasking (I really hate that word) and no one wants to be on the wrong side of the price if there is a sharp change in the spot price during the quarter.

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