President Cyril Ramaphosa announced that 35 of South Africa’s land borders and two seaports would be closed from 18 March 2020 as a measure to control the spread of Covid-19 (Coronavirus). Commercial activity would continue, however, at the closed Saldanha and Mossel Bay ports, as with the other six remaining ports.
This statement was followed by a meeting between the Minister of the Department of Mineral Resources and Energy (DMRE) — Mr Gwede Mantashe, and the Minerals Council of South Africa on the preparedness of the mining sector to deal with Covid-19.
South Africa is the main source of chromium concentrates for Chinese ferrochrome plants with typically 1.0–1.5Mt of concentrate exported every month. Ores leave the continent via three main ports, namely Richards Bay and Durban in South Africa and Maputo in Mozambique. The Komatipoort-Lebombo land border to Mozambique remains open and forms the main border crossing for ores to reach the Maputo port from the eastern Bushveld.
In China, furnaces are returning back to operating capacity after the Covid-19 curve has flattened, but many remain limited in terms of access to raw materials following domestic logistical challenges and are working off stockpiles. Chinese port stocks of chromium ores have reached 4Mt after typically oscillating at around 3Mt since 2018, following weaker demand for ferrochrome over the tail-end of 2019 that was extended by the Chinese Spring Festival and now exacerbated by the Covid-19 outbreak. But as stainless steel stocks are consumed and furnaces restarted, Roskill expects demand to ramp up and filter upwards through the supply chain.
The chromium market balance has been in a structural surplus since 2017, which has kept prices low over 2019 and made much of the upper half of the cost curve unprofitable. However, should South Africa supply become restricted because of domestic Covid-19 developments over the next few weeks or months, 4Mt of port stocks will only support the Chinese ferrochrome industry for less than three months (at 2019 operating levels).
Roskill will publish the third update to its Chromium: Outlook to 2029, 15th Edition report this month, which provides up-to-date market insights on chromium supply, demand, trade and prices for both metallurgical and niche applications together with cost curves and price forecasts. For more information or to subscribe click here.