Finnish-based Outokumpu, the second largest stainless steel maker in the world, is one step closer to reaching their ultimate goal becoming the world’s number one stainless steel maker. Earlier this week, Outokumpu announced plans to double their ferrochrome production to 530,000 tons per year, making the company self-sufficient in ferrochrome. Ferrochrome is essential for the stainless steel industry, since stainless steel expends more than 80 percent of all ferrochrome produced.
Approximately 420 million euros have been invested into this initiative, which should come to fruition before 2011. “The main benefit for Outokumpu is its ability to source the material at cost while selling it at prevailing market prices,” Outokumpu told the Associated Press. “The pricing mechanism of stainless steel allows stainless steel producers to charge for all raw materials at market prices.”
CEO Juha Rantanen estimates that annually, the expansion will lead to 200 million euros worth of additional operating profits. Lately, there has been higher demand for ferrochrome, causing prices to increase worldwide. Decreased ferrochrome output after power problems in South Africa, where more than half of the world’s ferrochrome is produced, should also have an affect on ferrochrome markets. On a similar note, stainless steel prices have risen, but it’s debatable whether volatile prices in ferrochrome or nickel have caused the escalation.