Japan NSSC may skip Q1 S.Africa ferrochrome shipments

By Miho Yoshikawa

TOKYO (Reuters) - Japan's Nippon Steel & Sumikin Stainless Steel Corp (NSSC) may skip lifting January-March shipments of ferrochrome from South Africa due to weak demand, a company official said on Wednesday.

It would be the first time for the company to defer ferrochrome shipments, he said, underscoring how demand for ferrochrome has slumped due to the sharp economic downturn.

South Africa is the world's biggest producer of ferrochrome, a key component in stainless steel to deter corrosion.

NSSC is owned 80 percent by Nippon Steel Corp and 20 percent by Sumitomo Metal Industries Ltd, and is Japan's biggest comprehensive stainless steel maker, according to the company's website.

The NSSC official said details of the agreement had yet to be worked out, but the company was already suffering from a glut in ferrochrome supplies.

"Given (high) inventory and (weak) demand ... it is just not possible to buy fresh supplies," he said.

He said NSSC was still in discussions with leading South African ferrochrome suppliers on how much it would buy under 2009 contracts.

NSSC typically holds term talks with Xstrata Plc and Samancor Chrome, though the official declined to name companies in its recent negotiations because the talks are still taking place.