HomeBase MetalsFerrochrome prices could leap 42%

Ferrochrome prices could leap 42%

An aerial view of
one of South Africa’s
ferrochrome complexes
Johannesburg, South Africa — MININGREVIEW.COM — 10 November 2010 – Ferrochrome contract prices may rise 42% to about US$1.76 a pound next year from US$1.24 this year, as demand for the stainless-steel ingredient continues to increase.

So says Heinz H. Pariser, head of Alloy Metals & Steel Market Research, in a copy of a presentation posted on Merafe Resources Limited’s website.

“Demand may increase 7.6% to 8.84Mt in 2011 from an estimated 8.21Mt this year,” he predicted. “That may widen the deficit to about 319 000t from 47 000t in 2010.”

“Merafe expects a recovery in the ferrochrome market through 2013 on world economic growth and a shortage of new capacity in South Africa for the near future,” the company said in a separate presentation to shareholders. The company’s venture with Xstrata Plc in South Africa is the world’s largest ferrochrome supplier.

“Stainless-steel production may grow to 32.7Mt next year from an estimated 31.2Mt, “Pariser said. “World stainless steel production is expected to jump this quarter on demand for fuel pipelines and petrochemical plants,” the Bureau of International Recycling said. Posco will boost output at its venture in China to 1Mtpa by 2013, from 800 000t, the Korea Economic Daily reported last month.

“Ferrochrome production in the country is under threat and probably not sustainable” as the government curbs energy use and pollution, Pariser said. “China’s numerous small and often outdated ferrochrome smelters account for about 80% of the country’s ferroalloy output.”

Some countries supplying chrome ore to China’s ferrochrome industry are also seeking to export less of the raw material and process more of it themselves to increase revenue. They are “taking a more critical stand” on exports, Pariser said.

“South Africa, with 72% of the world’s chrome ore reserves and about half of its chromite ore output, may benefit if it has enough generating capacity to power industry,” he added. The nation earned about US$2.5 billion (R17.3 billion) from local and export sales of ferrochrome last year, according to the presentation.

World ferrochrome demand may rise 22% by 2013 and capacity may gain 23%, Pariser said.