Ferrochrome demand virtually nonexistent
Supplier urges industry to cut ferrochrome production
Tom Stundza -- Purchasing, 11/10/2009 11:30:30 PM
Ferrochrome producers must cut production by as much as 50% of capacity to allow supply and demand to again dictate price direction, says Danko Konchar, chairman of Kermas Group. That's because demand from steelmakers probably won't rebound quickly.
Konchar, whose firm runs South Africa's privately owned Samancor Chrome, tells an international ferroalloys conference in Monte Carlo: "Cut production-- there is no demand yet." According to a Reuters report of the meeting, Konchar also says that "demand will come but you need to be patient."
"Today there is no demand but the price in chrome ore is not going down too much," he added. "Price is connected to supply and demand ... at the moment, this movement of price in the third and fourth quarter is not due to demand."
Ferrochrome, used in making stainless steel to prevent corrosion, currently is traded at about 88¢/lb, Reuters reports, which is well below levels above $2.50 a lb in April last year.
Taking his own medicine, Konchar says Samancor, the world's second-largest ferrochrome producer, shut down all its mining and smelting operations between December last year and the end of February 2009 after demand slumped. He tells Reuters that his organization since then has kept production between 55%-60% of capacity.
"If (producers) don't cut, they will ruin their future position," he says. "The price will not be related to production ... the suggestion is to cut now and not have up, down, up, down (of price volatility)."
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