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YILDIRIM Expects Recovery in Ferrochrome and Chrome Ore Prices in 2012

“FeCr and chrome ore prices are going to recover in this year since 2012 is expected to be a better economical year than 2011 as we are observing a lot of occurrences at the beginning of this year which give us reasons to have this optimistic view” stated by Mr. Robert Yuksel YILDIRIM, President of Yildirim Group (ETI KROM Inc. and Vargon Alloys AB).

Since USA will avoid a recession as production and employment are continuously growing in the recent months and US government is set to lose its monetary policy (QE3) in order to ensure stable and outperforming growth at this Presidential election year. In Europe, Germany will remain the driving force of the European economy. ECB’s low interest $ 489 billion lending facility (distributed to 523 banks) will find its way to Main Street (not Wall Street) and stimulate the continental economy creating jobs and hope. In addition, BRIC economies will keep strong economical growth lead again by China. This year in China is “The Year of Dragon." It is very important for Chinese since it is symbolizing China. This year is colliding with the Chinese Communist Party’s Congress in October where the new Politburo members will be chosen. Mr. Yildirim expects that starting from 2012 the Chinese government will keep the full throttle infrastructure spendings which also will ensure economical growth and new jobs for the Chinese.

Mr. Yildirim is keeping his hopes high in 2012 and believes that demand for commodities will remain robust, strong and growing. On the other hand, the investment banks and hedge funds may reestablish their positions in commodity markets as loose monetary policies in EU and US will continue. It could create safe haven status for them like we have seen it in 2010. These all are just a few macroeconomic aspects beside other facts strengthening our positive expectations for 2012” Mr. Yildirim added.

“Our world-wide customers have started to order their regular volumes. It means that no reduced quantities for 2012 which would be a sign of good order books for Q1 globally. For some customers, we observe that the quantity asked is significantly more than their actual consumption highlighting the possibility of building up stocks to protect themselves from higher prices" claims Mr. Yildirim. Today, he also believes that there are many positive fundamentals in the market to lift FeCr and chrome ore prices higher than 2011.

“It is getting harder to keep the skilled workforce happy with their existing salaries as inflation is increasing everywhere. In 2012 FeCr and chrome ore production costs will be constantly soaring due to higher power, fuel, carbon reductants, mining royalties or similar resource based taxes and logistic costs. Therefore, the bottomed out FeCr prices will be seen until middle of February 2012. This may result with a wide range of FeCr production cuts and slow down of ongoing investments in new smelting capacities out of China” Mr. Yildirim believes.

“South African ChCr producers will even face more escalated cost pressure in the next quarter as Eskom is going to increase the power price up by 25% in April 2012. Because of all these factors, we expect to see a moderate increase in spot FeCr and chrome ore prices after Chinese New Year. Therefore, spot market prices will result a higher ChCr benchmark settlement for Q2 deliveries by end of March” stated by Mr. Yildirim without further elaboration about any precise price forecasts.

05.01.2012 / Asian Metal

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