The chrome ore and ferrochrome markets have closely followed developments in China, where increasing ferrochrome capacity (requiring imported feed) has outpaced other producing regions. Chrome ores experienced extremely high prices in 2016 and nearly two years of increased volatility, which encouraged a persistent over-supply that has kept chrome ore prices subdued over the past year. Prices for primary South African concentrate have been beneath US$200/t CIF China since mid‑2018 and this has made higher-cost South African output unprofitable.
Southern Africa hosts about 90% of the world’s chromite reserves and resources and accounts for approximately 60% of global chrome ore production. South African output rose above 20Mt for the first time ever in 2018. Most chrome ores are mined as a primary product although, in South Africa, around 30% of chrome ore output in 2018 was derived as a by-product from UG2 tailings of platinum group metal (PGM) operations. Six countries currently produce more than 1Mtpy of chrome ore, with Zimbabwe joining South Africa, Kazakhstan, India, Turkey, and Finland in 2018.
Over 90% of chromium consumption is attributable to metallurgical applications. Stainless steel alone represents more than 75% of consumption. Trends in stainless steel production are, therefore, the main determinant for the outlook of chromium demand. Ferrochrome is the intermediate chromium-iron alloy used in the steel industry. Most of the ferrochrome production is in the form of high-carbon ferrochrome and charge chrome, of which 80-90% is consumed directly in stainless steel. The balance of ferrochrome production is in the form of low- and medium-carbon ferrochrome used to trim the final chromium composition within specified Cr:C ratios of stainless and other steel products.
The chromium chemical and refined metal industry accounted for just over 3% of the total market in 2018. Prices for these niche products have followed different trends to metallurgical chrome ores and ferrochrome. China hosts by far the largest capacity of chromium chemicals production, although producers with less than 10ktpy capacity were largely eliminated a decade ago because of more stringent environmental regulations. As environmental inspections have ramped up in China in recent years, further closures and suspensions have allowed Kazakhstan, Turkey, the USA and India to gain a combined market share of 45% in chromium chemicals in 2018, up from 30% a decade ago. Demand for chromium chemicals is estimated to have consumed just over 1.5Mt of chrome ores in 2018.
After several years of 5-10%py growth in demand driven by stainless steel production, the chromium market is forecast to move into a period of more modest demand growth of 2-3%py. How will the chromium supply fundamentals be affected by regional cost and grade advantages? Is the production of cheaper South African UG2 chromite reaching a ceiling? How much further will Zimbabwe’s rapidly revitalising chromium industry develop? And, how are niche metal, alloy and chemical chromium markets performing?
With thorough analysis of supply, demand, trade, and prices, complete with historical trends and detailed ten-year forecasts, Roskill’s offers you your comprehensive chromium report. Roskill’s report includes quarterly chromium updates, which keeps you informed of industry news and trends, and allows us to provide you with up-to-date supply, demand and price forecasts on a quarterly basis.