Glencore’s benchmark – everyone’s entitled to their own opinion

A reader’s comment:

It’s not about winning or losing, or about prices in the micro market. I would not be surprised even if it is more than Q2’s i.e. 1.42 US$/MT. There are so many other dynamics evolving. 24 hours ago a host of US SS products were dutied by EU. 4 week’s ago export tax policy has been initiated in SA. 2 week’s ago NERSA allowed ESKOM some recuperation. These macros will drive the micros and set them for a long time.

Ping ponging in ferroalloys

A few US ferroalloy buyers were upset to hear that one index provider was thought to be including direct sales from producers to resellers to be included in price calculations.

“This could lead to  ping ponging,” one buyer noted. “A producer would make a ‘sale’ to the reseller at x price and then buy it back without it ever reaching a buyer. And, theoretically, it could be two sales instead of just one.”

Comment on Glencore’s third-quarter benchmark

It didn’t take long before comments started on Glencore’s third-quarter benchmark price.

Here is one:

Glencore has cornered (with Samancor through consolidation in SA) the majority of Ch Cr units being produced today as well as the large majority of the ore (Ug2) that the environmentally clean Chinese domestic FeCr producers have invested millions into in order to adapt their technology to make use of it. They are laughing all the way to the bank and holding back their units!

STS mills around the world (outside of China) are well aware and worried about  this and are looking to diversify away from Ch Cr and to make use of HC where possible as opposed to giving Glencore and Samancor all the bargaining power but it is not going the way they want as the majority of the extra units  available I hear are all going to China. India’s domestic situation isnt helping them (STS mills) either

The rand may have weakened (but is still up from the days of 15 ZAR/USD), Eskom and its woes arent helping, and with the Chinese FeCr producers being shutdown due to environmental regulations – there is a surge in demand for imported Cr units of all kinds into China.

I hate to say it but Glencore wins again?

New developments in composite electrodes

Javier Bullon delivered a paper on New Developments in Composite Electrodes at the recent Silicon for the Chemical and Solar Industry. I am attaching the abstract.

 

New developments composite electrode JBCdef

Lanxess expects a premium for its SA chrome mine

Lanxess has some pretty high expectations for the sales price of its South African chemical-grade chrome ore mine. The company is thought to be looking for ZAR1.8-billion, while the buyers seem to be all below ZAR1-billion.

Glencore’s third-quarter benchmark price under scrutiny

Glencore spent most of this week telling everyone within listening range the third-quarter benchmark price would be between $1.30-1.35 per lb (I thought price signaling was illegal, at least in the US). Still the question remains WHY $1.30-1.35 instead of lower?

It’s not like the South African rand is soaring against the dollar but instead the dollar is strong against virtually every currency. Stainless business outside the US is lackluster and ferrochrome supplies are plentiful, and finally it’s the normally slow third quarter.

The easy explanation is that Glencore wants to get off the roller coaster it started with one quarter pushing prices substantially up and then dropping it steeply in the next quarter. This system wrecked the mills surcharges and stopped consumers from ordering in the belief that the next quarter’s prices would be much lower.

One buyer said Glencore was punishing consumers twice, one for putting the price too high in the second quarter and not lowering it enough in the third quarter.

The only other explanation is that Chinese prices are up. Really?

While some people are touting UG2 prices in China at around $220 per mt, sellers say they are lucky to get any bites at $205. “I just don’t know where these prices are coming from,” one seller said. “The ferrochrome smelters are cutting back for environmental inspections and not taking any chrome ore plus ‘official’ Chinese ore stocks at ports are over 3-million mt. If you count the material in bonded warehouses, Chinese stocks are probably over 3.5-million mt.”

One seller said his fear is ore buyers trying to renegotiate the prices down, not up.

As for higher charge chrome prices, most of the reported sales are for very small tonnages that aren’t really representative. The real price will happen next week when the Chinese stainless mills announce their July ferrochrome buying prices.

Midgely joins TMT

Mark Midgely has another job. TMT Metals hired Mark Midgley as executive director to provide advisory services and define new areas of growth. Midgely previously worked for NiMet where he was ostensibly in charge of developing IUS businesses. TMT is principally in tin.

China to impose 25% duty on US produced polysiloxsane

China will place a 25% duty on imports of US produced polysiloxane, primary forms, 39100000.

Attached is the full list of the EU’s retaliatory duties against US imports

http://trade.ec.europa.eu/doclib/docs/2018/may/tradoc_156909.pdf

Outokumpu toying with daily alloy surcharges

It its latest debt prospectus Outokumpu explains its daily alloy surcharge system.

Outokumpu applies a daily alloy surcharge instead of the previously monthly model to certain customers in Europe. In this model, Outokumpu communicates the alloy surcharges on a daily basis for its customers on its website. Customers can decide whether to fix the alloy surcharge on the order date or any other date between the order and mid-week prior to the delivery week. Outokumpu believes that the daily alloy surcharge system decreases its exposure to volatility in raw material pricing of its products and makes hedging of raw material positions easier. However, the daily alloy surcharge does not eliminate Outokumpu’s exposure to volatility in raw material prices and certain customers may prefer the pricing model based on the Reference Period, which allows them to benefit from market price changes when timing their purchases, which may cause customers, distributors in particular to use competitive producers. Accordingly, Outokumpu may not be able to derive the anticipated benefits from the introduction of the daily alloy surcharge method.