Soft second half may await ferroalloy market

Soft second half may await ferroalloy market

High competition in the global ferroalloy markets has a tendency to pave the way for an overall decrease in ferroalloys prices around the globe. China, the hub of the global steel industry for the past few years, has become the most important playground for major ferroalloy producers like Ukraine, France, Japan and Norway. The competition between the companies of those countries kicked into overdrive at the beginning of 2005, as ferroalloy producers rushed to increase their production capacities in an effort to rake in profit because of the skyrocketing prices. But, as every good dream, this too will come to an end. Some experts forecast that the prices of ferroalloys will begin falling as early as the second half of 2005. These predictions have Ukrainian companies like Interpipe Group's Nikopol ferroalloy plant, which is the world's largest manufacturer of manganese alloys, especially worried. Nikopol produced over one million tons of ferroalloys in 2004. Of that production, more than half was exported. However, company officials have begun to feel the strict competition and are worried that the price increases will cease to continue. Nikopol and its parent company are in desperate need of investment, but the Yuschenko government of Ukraine apparently lacks the financial means to support such companies. Coincidentally, Interpipe Group was one of the companies that supported the former Kuchma regime. Though Yuschenko's attitude towards the company remains to be seen, Nikopol is certainly one company that would be hit hard by a possible softening of the market in the second half of 2005.