[Ferro-Alloys.com] Report of Impact on Global Metallurgical Supply Chain& Ores Market by Co-Virus Epidemic Online International Conference

Background 

        The COVID-19 outbreak disrupted our daily life and work, which caused the global economy and people's lives and property huge losses. Under the strong leadership of Chinese government, China has achieved a staged victory to fight against the epidemic, the business work restart orderly. However, the spread of COVID-19 in other countries brought a great uncertainty to China and global economy.

    For the metallurgy industry, Chinese domestic steel inventories reached to 34.3 million tons with the high record under the impact of corona virus, the steel demand got soft and weak after the downstream industry halts and cuts. China launched major infrastructure projects and series of policies to support the Small and Medium Enterprises and promote the growth and recovery of import and export trade business since March. But the outbreak of overseas epidemics in March gradually revealed the impact of import and export trade business. Now China with a long term depending on imported iron ore, manganese ore and chrome ore has encountered the impact of the epidemic situation which main exporting countries outbreak. The metallurgical industry supply chain face the potential risks and challenges.

  South Africa as the important manganese ore and chrome ore exported country to China, South Africa exported the volume of 13.426 million tons of manganese ore and 12.556 million tons of chromium ore in 2019, which accounts for 39.27% and 78.97% of the total imported of China. In Jan-Feb 2020, Chinese manganese ore and chrome ore imported from South Africa increased by 40.2% and 86.66% to 1.796 million tons and 2.148 million tons. South Africa announced that the 21 days lockdown which influenced the delivery time of April and impacted the Chinese domestic manganese and chrome spot market quickly.

    We invite the speakers who are Mr. Li Xinchuang, Chairman and Chief Engineer of China Metallurgical Industry Planning and Research Institute, Vice Chairman of China Iron and Steel Association, Dr. Liu Dong, Manager Director of Tubatse Chrome Pty Ltd and Tubatse Alloy Pty Ltd, Mr. Li Manchun, General Manager of Tianjin Jitie International Trade Co., Ltd, Mr. Manoj Kumar Thakur, Advisor of Million Link CEO.

   Mr. Li Xinchuang, Chairman and Chief Engineer of China Metallurgical Industry Planning and Research Institute, the theme is the Challenges of Chinese Steel Industry under Impact of COVID-19 include the Impact of COVID-19 on economy and the steel industry, Impact of COVID-19 on raw materials supply chain and Measures adopted by the steel industry to control the supply risk, while the coronavirus outbreak, the global economy halted, expanded fiscal policy and loose monetary policy, steel output hit a new record high, From Jan to Feb 2020,output of pig iron and crude steel in China was 132 million tons and 155 million tons increased by 3.06% and 3.07% year-on-year respectively. From Jan to March, steel demand of key consuming industries such as mechanical equipments, electrical appliance, automobile etc declined overall. According to MPI’s forecast, Chinese steel consumption in 2020  is about 850 million tons decreased by more than 5.0% year-on-year. The export of steel declined and the high steel stocks with a new record, while the iron ore keep a more supply than the demand, the impacts of manganese and chrome by the lockdown of South Africa extended, the price in ports increased, the price trend of manganese  will up and down range in 2020, the pressure with the chrome demand limited. The profit of steel less and less, some steel mills loss profit sharply, the steel industry in a low level and promote the steel combined. With the development of steel industry technology improving, the structure of steel better and the risk of management ability up and Mr. Li suggest that the industry establish coordinated service platform for ferroalloy supply chain, take full use of the futures, promote international development to optimize resources allocation worldwide.

    Dr. Liu dong, Director of Tubatse Chrome Minerals and Tubatse Alloy, the theme is Covid-19 Impact of South Africa Chrome production and Export, when the coronavirus outbreak, the economy with a great pressure and the ratio of unemployed up and the disruption of trade and value chains will affect the export of commodities. the president announced the lockdown policy and the mine all stopped except the essential goods and the coal to the grid of state. While from 6th April, some part of business recovery and the ratio less than 50%, and some small smelter can work but only 50% of workers. The port partly resumed small-scale shipments on April 6, but only limited to the shipment of cargoes that arrived in ports before March 23, which was inefficient. South Africa's resource 5.5 billion tons, accounting for more than half of the world and the world's second largest ferrochrome producer after China，In 2019, the ferrochrome production was 14.727 million tons globally，ferrochrome production was 3.64 million tons，Chinese stainless steel industry dependence on chrome resources in South Africa-very high. According to customs, China imported 15.844 million tons of chrome ore in 2019, which originating in South Africa was 12.567 million tons, accounting for 79.3% of China's total chromium ore. China imported the ferrochrome 3.015 million tons and 1.84 million tons from SA and accounting for 61.3% China imported totally in 2019. In 2020, the lockdown period of 38 days is expected to reduce the chrome ore output 2 million tons, chrome ore exported 1.5 million tons decreased, and down of ferrochrome output 250,000 tons.The chrome ore production will be reduced by 2.2-3 million tons compared to last year, and the ferrochrome production will be reduced by 450,000-900,000 tons.

Conclusion：Ferrochrome and chrome ore with a support later. The impacts of chrome mines may reduce the production and supply less and will promote the mines mechanization and automation level and the opportunities of South Africa Investment

    Mr. Li Manchun, General Manager of Tianjin Jitie International Trade Co., Ltd, the theme is The Risk of South Africa Manganese Supplying to the Chinese SiMn Plants, the impacts of the all ferroalloys industry chain, From mines, trade, alloy factories and steel mills, the impact of each chain is significant. South Africa ’s imports of manganese ore account for 40% of China ’s total imports. Among them, South Africa ’s semi-carbonite and high iron ore manganese are mainly used, and alloy plants use South African mines. The volume is also increasing, which shows the importance of South African mines. The domestic manganese ore port quotations were mainly affected by the announcement of two lockdown policy by South Africa, which boosted the price upwards. Traders ’s pot quotations responded in a timely manner, and the changes were fast until the block was closed, and tentative quotations by large domestic traders. For manganese ore procurement, Jilin Ferroalloy adopts half spot and half futures procurement methods. As the mine price continues to rise, the cost of the alloy factory increases, and the liquidity of raw material purchase funds increases, which in turn increases production costs, resulting in factory production reduction or suspension. In response to this increase in miner quotations, Mr. Li said that as the overall price of manganese ore is in a weak market in 2019, and traders have also suffered large losses, the outbreak of the corona virus, traders ’quotations have been raised without exception, but for the overall healthy development of the industry, the alloy industry For the coordinated development of the chain, from the current point of view, the impact of the epidemic cannot be short-term. As a link in the industrial chain, all should be prepared to respond. This time of the impact of the epidemic has also exposed some related problems in the industry. It is estimated that all links in the manganese alloy industry chain may bring corresponding changes in the future.

Mr. Manoj Kumar Thakur, Advisor of Million Link CEO, the theme is Impact of COVID-19 on Indian Steel Industry, Introduced from the global economic situation, the Indian economic situation, the global steel industry, coal & coke and the Indian steel industry, under the influence of the 2020 epidemic, the global economic recession risk increased, the manufacturing supply chain decreased, and the company faced a survival crisis, trade and investment The tension will continue and may spread further. The domestic epidemic blockade and isolation in India, personal consumption such as transportation, automobiles, metals, and retail affect demand, and the epidemic affects the interruption of the supply chain, resulting in weak demand and falling commodity prices. India's crude steel production in 2019 is 1111.2 million tons, an increase of 1.74%. The current utilization rate is 35-40% to maintain blast furnace operation. It mainly produces iron and slabs / slabs. Due to a serious imbalance between supply and demand, inventory backlogs have caused pressure on Indian steel prices . Due to the impact of the epidemic, the production of some domestic steel companies in India has shrunk or even ceased production. In 2019, India ’s total coal imports amounted to 260.001 million tons, and in February 2020, 44.46 million tons were imported. Thermal coal imports reached a record high, reaching 18193 million tons per year. The Indian steel industry mainly imports coking coal and the importing country is Australia. The decline in demand in the construction / automotive / capital goods sector caused by the epidemic will affect steel sales, and government spending on projects, infrastructure, capital goods, construction, mining, and hotels will stimulate steel demand.

Guest Panel Discussion：

Mr. Hill Summer, President of Million Link(China) Investment Limited: Introduced the current situation of Gabon. At present, the arrival of Gabon ships requires temperature measurement by inspection and quarantine personnel. The loading and transportation of manganese ore is not a big problem. Gabon countries are also implementing reduction or restriction of aggregation. Normally, under the current emergency situation, the uncertainty increases. At the same time, President Xia communicated with Sinosteel Liu under the 60% production situation in South Africa and the South Africa's chrome ore export.

Mr. Wang Quanyi, President of Tianjin Jinsheng Metallurgical Products Co., Ltd：The two lockdown policy in South Africa caused two Chinese domestic price increases of manganese ore. At the same time, the increase in the domestic silicon manganese futures price increase also helped to increase the price of manganese ore. The above all have an impact on manganese production enterprises. At a high cost ratio, manganese alloy plants adjust the ratio of futures and spot mines to respond to market conditions, and in the long period, high price risks are also increasing. To 5.5 dollars / dmtu offer of Comilog, manganese ore prices rose in March, April and March, increasing the pressure on the alloy plant, and manganese mines arrived in ports after May and June, and the South Africa lockdown caused one month not enough to affect domestic consumption. The steel price is not optimistic, the spot price of the port is increasing, and the alloy plant may reduce production.

Mr. Zhang Junhong, Supply and Marketing Director of Xinganglian Metallurgy Co., Ltd ：The epidemic in South Africa is a factor driving the rise of domestic chrome prices. At present, the high carbon ferrochrome price in Inner Mongolia is quoted at more than 5900 yuan / ton, the price of chrome ore increases by 4-5 yuan / dmtu, and the current domestic stock of chrome ore is 4 million tons. Mainly, the factory mainly cooperates with steel companies, and the factory consumes its own inventory. However, in 2019, the Inner Mongolia government requires the factory to upgrade its technology and transform it. The initial investment of the factory is relatively large.

At the same time, India, Zimbabwe and South Africa have blocked the epidemic. The ferrochrome plants in three countries have reduced production. The market has broken the supply and demand balance. Therefore, prices may still rise in May. The domestic ferrochrome output in March was 380,000 tons, and due to the recovery situation, the output in April is expected to be 400,000 tons.

Mr. Li Xinchuang, Chairman and Chief Engineer of China Metallurgical Industry Planning and Research Institute：The state suspends the replacement of steel production capacity and the filing of projects. Chinese domestic steel production increases instead of decreasing, while steel consumption decreases and replacement is reduced. Domestic steel inventories in the first quarter were at a new high, and demand was weak. Demand in the second quarter was better than that in the first quarter, and still faced high inventory pressure.

Dr. Liu Dong, Manager Director of Tubatse Chrome Pty Ltd and Tubatse Alloy Pty Ltd：The epidemic situation in South Africa is still concerned. The medical level in South Africa is low. Due to the low degree of mechanization, the labor force is the main source. With 60-70% production in the mines and smelting areas, the supply is reduced. South Africa entered the winter after June, and uncertainties increased.

Thanks for all the speakers speech and thanks for attending the Webinar hosted by www.ferro-alloys.com 

• [Editor:tianyawei]