[miningmx.com] — INTERNATIONAL Ferro Metals, the London-listed ferrochrome producer with operations in South Africa, on Tuesday reported a 6% drop in quarter-on-quarter (q/q) production to 51 331 tonnes in the three months to end June.
But the company said production was up 178% on the corresponding period last year.
The company produced 54 394 tonnes of ferrochrome in the three months to end
March 2010 and 18 437 tonnes in the June quarter of 2009.
Production for its full 2010 financial year reached 200 440 tonnes, an 82%
improvement on the 110 364 tonnes produced in the 2009 year.
Sales of 55 433 tonnes for the quarter were down 13% on the previous quarter but up 32% on the corresponding period last year.
Full year sales were 87% higher at 190 432 tonnes from 101 835 tonnes the year
before.
The company had net cash of R47m as at end June 2010, while net borrowings were R26m. IFM said it has a working capital facility of R500m.
Ferrochrome inventory of 17 976 tonnes at end June is below the 22 748 tonnes as at end March.
IFM said a Benchmark European ferrochrome price of $1.36/lb was achieved for
the June 2010 quarter.
The substantial price increase of 35 US cents during the June quarter reflected
increased stainless steel production and subsequent ferrochrome demand.
The price has, however, softened by 6 US cents in the current quarter to $1.30/lb,
reflecting a slowing down of stainless production for the quarter particularly in Europe and China.
But the company expects the ferrochrome market to stabilise over the next quarter due to a combination of low global ferrochrome inventories and South African production cuts during its high electricity winter tariff months.
“The company benefited from higher ferrochrome prices during the quarter although the full potential wasn’t realised because of lower production levels and delayed
shipments resulting from the Transnet strike,” said IFM chief executive David Kovarsky.
“Since the last quarter, however, greater operational efficiencies have been achieved that should increase production levels, lower costs and will help us to meet future challenges,” Kovarsky said.
Looking ahead, stainless steel demand is expected to strengthen over the next quarter with a corresponding increase in ferrochrome demand.
This is further supported by South African ferrochrome production cuts during the
winter tariff period.
Market commentators expect a market tightness to develop over the next two years due to expansion constraints in South Africa as a result of power shortages.
