Johannesburg, South Africa — MININGREVIEW.COM — 09 July 2008 – South African ferrochrome producer Hernic says it expects prices for the metal to rise by more than 10 % in the fourth quarter of the year.
South Africa is the world’s biggest producer of ferrochrome, which is mainly used as an alloy in stainless steel to prevent corrosion, and the country has more than 72% of the world’s chrome ore reserves.
Hernic Ferrochrome operations director Jasper Pieters told Reuters on the sidelines of a ferro- alloys meeting here that input prices were soaring, and that ferrochrome might follow suit.
“We see almost a monthly increase in various input costs, such as fuel, coking coal, coal, and mining costs," he said. “I see ferrochrome prices rising by 10%, or more, depending on the input costs.”
Hernic Ferrochrome is majority-owned by Japan’s Mitsubishi Corporation.
Dankor Konchar – chairman of South Africa’s privately-owned Samancor Chrome, the world’s second-biggest producer of ferrochrome – agreed that prices might rise further.
“Prices have yet to peak,” he said. “On the one hand you have an increase in costs of electricity, coking coal, coal, fuel, in fact everything, and on the other hand I see a shortage of ferrochrome in Q4,” he predicted.
South Africa’s Merafe Resources CEO Steve Phiri foresaw what he described as “strong prices” for ferrochrome in the next few years, owing to the country’s power crunch.
He said the power crisis meant output would decline by 5 to 10% annually until 2012, when adequate power was expected to have been installed. “We can celebrate prices being strong owing to the output declines, but this will be an artificial price rise," he told delegates at the ferro-alloys conference.