The 2014 ferrochrome price forecast may have something to do with a quiet milestone that was passed this year (and I don’t mean my birthday): China overtook long-term global ferro-chrome production leader South Africa as the world’s largest producer.
True, a large part of China’s import of chrome ore came from South Africa in the first place. South Africa exports were up 48% to 3.1 million tons in the first half of this year, but a number of factors have converged to support China’s rise as the dominant producer in yet another metallic category.
HSBC reports in its latest Global Metals & Mining Quarterly Review that stainless production in China was up 26% year-on-year in the first four months of 2013. Although growth is slowing, it still continues and production for the year on the whole should still be up a remarkable 14%, the bank’s analysts believe, as slowing GDP growth being counterbalanced by rising intensity of stainless use in just about every walk of life.
Stainless isn’t the only use for ferro-chrome, but it does consume some 85% of production and strong Chinese demand will see global consumption rise about 6.5% in spite of mediocre demand increases outside of the country.
The challenge for South Africa continues to be power supply.
Production curtailments as a result of power problems have been a feature of South African production for several years now and will continue this year and next, especially during the winter period when tariffs rise, HSBC reports. South Africa will remain a significant producer, but as new mines come on-stream, such as Glencore’s Lion, ENRC’s Aktobe and Outokumpu, supply will rise between 2012 and 2016 with a compound annual growth rate of 6.8%.
The market is currently in deficit, the bank estimates a marginal 89,000 tons, but as new projects come on-stream this will likely move into surplus depressing rises in contract prices.
What Is the 2014 Ferrochrome Price Forecast?
Next year, the bank sees US $1.10/lb as a likely average, with the price rising to $1.20/lb for 2015 and US$1.25/lb for 2016.