Predicting lower prices for the major alloys that go into stainless steel "is not possible," given the need to keep inventories low and the emphasis on reporting standards, according to a trader.

Speaking at the American Metals Market Stainless and Its Alloys conference in Pittsburgh Tuesdayg, Dan Lehrman, president and founder of Hudson Metals, predicted that the extraordinary growth in demand by the Chinese stainless steel industry meant that high-carbon ferrochrome prices would exceed the all-time record of $1.10/lb in the US. He said that prices were already at the $1/lb level.

"Last December, high-carbon ferrochrome prices in the US were about 60 cents/lb; today, they're $1/lb. That's extraordinary price growth in four months," he said. "The reason for increasing prices is an absolute boom in stainless steel, especially in China," he added. He said the decision to award Beijing the 2008 Olympic Games forced China to modernize from an economy stuck in "early last century to shine before the world as an Olympic host."

Lehrman said that the removal of the export tax rebate on chrome ore and the introduction of an export tax earlier this year was because China wanted to keep its raw materials and have greater control over them. But it had also put upward pressure on prices. He said that prices for chrome metal in the US were around $8,000/mt CIF Baltimore, which equated to 375-385 cents/lb. Last December, chrome metal prices were 280 cents/lb.

He said that producers had two choices. "They could go for greater market share, or increased profit. I think they'll go for profit because the chrome market has had several years of low pricing." He added that the price boom came to chrome late.

Looking forward, Lehrman predicted that chrome metal prices would exceed their current range of 375-385 cents/lb. "And I think [high-carbon] ferrochrome will exceed its all-time high of $1.10 through 2008."

Earlier, on the sidelines of the conference, a ferroalloys trader claimed to have sold around 800 st of high-carbon ferrochrome this week at $1/lb for April-May delivery. Last week, the Platts assessment for 60-65% high-carbon free market ferrochrome was 93-94 cents/lb, up from 90-92 cents/lb previously.