Chromite soaring Prices
Rising Demand Lifts Ferrochrome Prices
By Charlotte Mathews
02 Jul 2008 at 08:34 AM GMT-04:00
JOHANNESBURG (Business Day) -- Benchmark ferrochrome prices negotiated for the September quarter have risen 6.8% to $2.05/lb compared with the June quarter, Merafe Resources [JSE:MRF] said yesterday.
Ferrochrome contract prices more than doubled in the past year on continuing growth in demand from the steel industry and restricted supply. South Africa has 72% of the world’s chromite ore reserves and 43.7% of chromite ore output, according to a presentation two weeks ago by London-listed International Ferro Metals (IFM).
Chromite ore is exported in raw form or processed into ferrochrome. Ferrochrome provides hardness to stainless steel, and its price reflects changes in steel demand as well as supply issues. is the world’s second-cheapest ferrochrome producer after , says IFM.
London-based investment group Fairfax said in its morning note to clients yesterday that spot prices for high carbon ferrochrome appeared to be easing and were about $2.40-$3.00/lb compared with $2.45-$3.15/lb last week.
IFM MD David Kovarsky said 90% of ferrochrome was sold on contract, and the spot market was small. That spot prices were still higher than contract prices indicated the supply of ferrochrome remained tight, he said.
Although IFM and Merafe are in a closed period, which stops them giving detailed commentary, IFM said in its presentation on June 17 it expected stainless steel growth would continue. It quoted an International Stainless Steel Federation forecast that stainless steel production would rise 6% this year compared with last year.
However, quoted consultancy Meps as saying that stainless steel output would be flat this year.
IFM said ferrochrome supply was limited. Industry forecasts were for a 326,000 tonne shortfall this year. It showed Metal Bulletin expected the European charge chrome spot price would peak at about $3.75/lb by the first quarter of next year and decline slowly until 2013, but remain above $1.25/lb.