CHICAGO Globe Specialty Metals Inc. expects prices to
increase in 2013 thanks to improved demand from a host of
sectors, including automotive, construction, steel, consumer
goods, solar, and oil and gas.
The New York-based silicon metal producer has increased its
inventories in anticipation of higher prices in the future,
company executives said during a conference call following the
release of earnings Feb. 8.
In anticipation of a stronger pricing environment in
2013, we passed on some lower-priced, below-market business
presented at the end of the year (2012), chief executive
officer Jeff Bradley said. We have done this in past
years at the end of the pricing season only to realize better
returns in the following year.
For calendar year 2013, Globe has contracted approximately 80
percent of its silicon metal and silicon alloy capacity to
annual fixed prices, quarterly contracts or business tied to
indices, Bradley said. We have left room for spot
business, he said.
Pressed by an analyst on where current prices were, Bradley
cited industry publication figures in the low $1.20s per pound.
But he also noted that Globes aggregate business of both
fixed price and index business were, in aggregate, above
current published prices, which is why he said the company
decided to leave more room for spot business.
Globe reported a $10.7-million increase in inventory for its
fiscal second-quarter 2013.
Shipments decreased in the second quarter ended December 31
compared to the first in part because of the timing of
contractual business, but also due to the modest
inventory build, chief financial officer Malcolm Appelbaum
On the production front, Globe expects to produce 110,000
tonnes of silicon metal and 120,000 tonnes of silicon alloy in
2013, Appelbaum said. The company has scheduled three
maintenance outages in its fiscal third quarter and three for
its fiscal fourth quarter. They are expected to reduce
production by 2,000 tonnes in the third quarter and 3,000
tonnes in the fourth quarter, he said.
In addition to silicon and silicon alloys, Globe is also seeing
increased revenue from other products, including silica fume, a
byproduct of the smelting process used in concrete, Bradley
Silica fume goes into everything from buildings and refractory
products to the cement used to line shale wells, he said.