Negotiations between South Africa's Xstrata Alloys and Japan's Nippon Steel & Sumikin Stainless Steel Corp. for ferrochrome contracts for the second quarter of 2014 started last week, one of the participants in the negotiations said Tuesday.

The negotiators held their first meeting in South Africa last week during an International Chromium Development Association event, the source said, declining to comment further.

As in previous quarterly talks, Xstrata asked for a price hike to sustain production amid rising power costs in South Africa, but the buyer was heard to have pointed to the low demand in Asia, said other sources familiar with the negotiations.

The NSSC charge chrome price for Q1 was 126 cents/lb CIF Japan.

Japanese ferrochrome buyers, who set their term prices on the basis of the NSSC settlement price, said they were expecting Xstrata to offer a 5-10 cents/lb increase in prices but they added that they saw a likely rollover of the Q1 price into Q2.