[miningmx.com] — An end to de-stocking coupled with rising demand will ensure ferrochrome contract prices do not fall below current levels for the fourth quarter, South African producer International Ferro Metals (IFM) said on Thursday.
Earlier this month, ferrochrome producers in South Africa, the world’s largest producer, agreed to a less-than-expected fall of 4% in the third-quarter contract price to $1.30 a lb.
“We are happy with the price,” IFM chief executive David Kovarsky told Reuters. “At the moment we’re going through a de-stocking cycle but it doesn’t reflect end consumption.”
“By the end of this quarter we’ll start seeing a revival in demand as stainless steel production starts increasing,” he added. “I wouldn’t expect it (Q4 price) to be lower than $1.30.”
The ferrochrome sector made sweeping cuts to production last year when demand and prices tumbled during the global downturn.
Ferrochrome, used in stainless steel to prevent corrosion, is traded at about $1.18 a lb on the European spot market, well below levels above $2.50 a lb in April last year.
“We are seeing a contraction in global steel production globally, particularly in China and Europe,” he added. “The immediate challenge is volume in this quarter but I think they will pick up in the next quarter.”
IFM can produce 265 000 tonnes of ferrochrome per year at full capacity, but Kovarsky said this year’s figure will be below this due to the global economic slowdown.
