NEW YORK A crackdown on
ferrosilicon smuggling across the China-Vietnam border could
lead to a rise in domestic prices, sources say.
"I hear theyre cracking
down big-time right now. Some of the big producers like Erdos
(Xijin Kuangye Co. Ltd.) have gone to the government saying
Weve got to do something about this. The talk
is that therell be no more material until mid-May," one
supplier said, adding that he had already seen an uptick in
sales on the news.
A trader echoed the sentiment.
"The borders shut," he said. "You cant get anything
from Vietnam at the moment."
Erdos couldnt be reached
The crackdown comes after a
March influx of the material led to softer domestic prices
(AMM, April 9). The material was allegedly smuggled to
Vietnam from China to avoid a 25-percent export duty. Some was
then sold to the United States.
Prices have since recovered to a
range of 93 to 95 cents per pound from 90 to 95 cents
previously, as most of the smuggled material has now been sold.
Prices could rise further if the border remains closed, sources
represents savings of about 4.5 cents per pound compared with
regularly imported Chinese material, which would cost around
94.5 cents per pound to get into a domestic warehouse at export
prices around $1,400 per tonne, sources said.
These are also poised to rise as
export tags climbed to between $1,400 and $1,420 per tonne
f.o.b. main Chinese ports Friday from $1,380 to $1,400 per
tonne previously, according to AMM sister publication
However, some were skeptical of
the crackdowns effectiveness.
"I hear that the border is very
poor," a second trader said, adding that this would make
complete control over illegal exports very difficult.
Erdos, based in Inner Mongolia,
is Chinas largest ferrosilicon producer and has the
capacity to produce more than 1 million tons of ferroalloy
products annually, according to its website.