Roskill Report Suggests Chrome Market May Have Bottomed

by Stuart Burns on June 9, 2009

Style:    Category: Ferro Alloys

We hear chrome and immediately think of both stainless steel and the bright shiny finishes created by the metal plating industry. In fact chrome has many uses and not least in unseen ways such as the chemicals industry, refractories and catalysts. But it is true the bulk of chromite ore is consumed in the production of stainless steels usually via the intermediate of ferrochrome.

Export prices for ferrochrome have fallen by 68% for the ten months to May 2009, as demand from stainless steel fell 3.5% last year and a further 24% in 2009 according to a report by Roskill just released. Around 70% of world ferrochrome production capacity was suspended in the first quarter of 2009, with the Xstrata-Merafe joint venture operating at 20% of capacity since December 2008, while Samancor Chrome suspended all production in the first quarter of 2009.

Stainless steel production has risen dramatically this decade largely due to massive demand and corresponding investment by the Chinese. Even as demand began to drop in 2007 due to the high price of nickel, buyers switched to chromium grades and hence the pressure remained on prices for ferrochrome. Chrome metal has been driven by strong aerospace growth particularly for super alloys which pushed consumption up 13% in 2008. Since then, demand has eased and will continue to do so as the aerospace market goes into a short term decline before picking up in 2011-12.

Although Roskill doesn’t see much increase this year from current prices of $0.69/lb for ferrochrome or $135/ton for chromite ore, they are suggesting a 20-30% increase in 2010 as run down inventories and a more balanced supply/demand situation stimulates production for re-stocking in 2010.

–Stuart Burns

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