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To: LoneClone who wrote (17482)	4/10/2008 1:20:57 AM
From: LoneClone	Read Replies (1) \| Respond to of 194619

UPDATE 2-European Q2 ferrochrome prices jump 60 pct Mon Apr 7, 2008 9:43pm IST in.reuters.com (Adds analyst comment) By Eric Onstad LONDON, April 7 (Reuters) - Contract ferrochrome prices in Europe for the second quarter of 2008 surged by 60 percent to $1.92-$1.95 a pound from the previous quarter on tight supply from biggest producer South Africa amid power shortages, producer sources said on Monday. One producer source said the price was set at $1.92 a pound while two others said prices were around $1.95 for charge chrome, the highest grade of ferrochrome, versus $1.21 per lb in the first quarter. Ferrochrome, a key ingredient in stainless steel, is supplied to European steel groups such as ArcelorMittal (ISPA.AS: Quote, Profile, Research) and ThyssenKrupp (TKAG.DE: Quote, Profile, Research) by South African producers including Samancor and Xstrata (XTA.L: Quote, Profile, Research). As demand for stainless steel outpaces supply, spot prices are rising even more than contract levels. High-carbon ferro-chrome FECRO-HC-RU was last quoted at $2.70 per lb., double the level nine months ago, pointing further rises in the contract price. Q3 PRICE HIKES EXPECTED "I think we can see at least another (increase of) 20 to 30 cents in the third quarter," said one of the South African producer sources. "With the 50 percent increase in power prices, the producers are going to need it." A power crisis in South Africa has led to electricity rationing and production cutbacks by ferrochrome producers. South African state electricity firm Eskom [ESCJ.UL] has asked for a price hike of 53 percent as it scrambles to boost capacity. The company has been struggling to meet the demands of Africa's largest economy and has resorted to rolling blackouts to cut demand since the beginning of the year. "Continued blackouts in South Africa keep supply under pressure," said John Meyer, head of resources at investment bank Fairfax in London. "A stronger South African rand further offsets the benefits of a rise in ferrochrome prices (to producers) but all this also means that ferrochrome prices simply can not return to last year's levels without significant production being shut." South Africa is the world's biggest producer of ferrochrome -- an alloy to deter corrosion in stainless steel -- and has around three-quarters of the world's chrome ore reserves. Xstrata, a major producer, declared force majeure to ferrochrome customers in February as a precautionary measure in case it could not make deliveries. It said in March power shortages were expected to cut production to around 85 percent of capacity.