Glencore has cut its ferro-chrome production guidance for 2019 by 10% as part of its extended winter shutdown. This announcement comes amidst ongoing electricity concerns in South Africa. Eskom, the national power utility, released its financial year to March 2019 statement, which outlined a net loss of ZAR20.7Bn (US$1.5Bn) and a current debt now exceeding R440Bn (US$31.0Bn). Failing to cover operational and debt financing cost with power sales has prompted governmental support of ZAR128Bn (US$9.0Bn) over the next three years to keep Eskom afloat.
Glencore had already announced the introduction of energy saving techniques at its Lydenburg ferrochrome plant last month, as ongoing power concerns and rising tariffs are adding to ferrochrome production costs in South Africa. While costs underpin the fundamental supply of ferrochrome, slowing demand from the stainless steel industry has superimposed tightening margins for ferrochrome producers globally.
Chinese ferrochrome tender prices released by major stainless steel producers have seen a decline of 15.8% in US$-terms since April this year. Average ferrochrome tender prices in China stood at US$0.74/lb (including VAT) in July and announced tender prices have remained unchanged in August. At this price level, the majority of South African ferrochrome plants (including those using energy-saving techniques) have become unprofitable when supplying Chinese operations. Over 40% of South African ferrochrome exports in H1 2019 have gone to China, up from 36% over 2018.
Roskill’s NEW Chromium: Outlook to 2029 report, 15th edition, was published in June 2019. The report provides detailed historical analysis and 10-year forecasts of chromium production, consumption and prices. It also contains detailed analysis of company and country production for all chrome intermediate products, as well as an in-depth examination of consumption across all end-uses including steel alloys, chromium chemicals, foundries and refractory applications.