UPDATE 1-Spot ferrochrome in Europe hits highest since Nov 2008
* Ferrochrome demand picking up worldwide
* Q2 ferrochrome could settle at $1.35/lb
LONDON, Feb 15 (Reuters) - Benchmark ferrochrome prices on the European spot market have jumped to their highest in more than two years on strong demand for the material valued for its anti-corrosive properties.
High carbon ferrochrome FECRO-HC-RU is trading at around $1.35 a lb this month from last month's $1.20 a lb.
Current levels for the material used to make steel are the highest since November 2008 when prices crashed as financial and commodity markets tried to price in a deep, prolonged recession.
"Trend is up, initial indications for second quarter ferrochrome price contracts settlement are for $1.35, but I have my doubts," a Europe-based trader said. "Not sure, they (producers) will be able to carry it off."
Traders say ferrochrome prices are rising in major steel producing centres such as the United States, the world's largest economy, Europe and top producer China.
"Some spot deals I've seen have been at $1.40," a London-based trader said. "Demand seems to be much, much stronger everywhere."
High carbon ferrochrome prices are above 130 cents a lb with some higher grades now over 140 cents a lb, analysts said.
Prices in China have ticked up steadily since the middle of December and are now reported at 110 cents a lb, Credit Suisse said in a recent note.
"This bodes well for the (second quarter) contracts, likely to be announced in late March. We expect ferrochrome prices to rise from the second quarter and forecast an average price in 2011 of 140 cents a lb," it said.
"Industrial production momentum is accelerating and we expect steel production to rebound in 2011."
Metals prices have a strong correlation with industrial production and manufacturing data.
Expectations of tight power supplies in South Africa, a major producer of ferrochrome are also said to be have helped boosted prices. [ID:nLDE7050WB] (Editing by James Jukwey)
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