Ferro-Chrome Prices Under Pressure Amid Rising Global Production

ICDA

The ferro-chrome market is experiencing persistent downward pressure on spot prices, driven by rising global production and weaker demand from downstream markets in the EU and US. These trends were highlighted during the International Chromium Development Association (ICDA) annual conference in South Africa.

Rising Global Production and Market Shifts

According to ICDA senior market analyst Tanya Atalay, global ferro-chrome production in the second quarter of 2024 surged 12.4% quarter-on-quarter and 23% year-on-year, contributing to a 15% year-on-year increase for the first half of 2024, reaching 9.1 million tons. This rise was primarily fueled by higher production of high-carbon and low-carbon ferro-chrome, while medium-carbon output declined.

China and Kazakhstan emerged as the main drivers of increased production:

China expanded its ferro-chrome capacity significantly, contributing to global oversupply.

Kazakhstan leveraged low energy costs to gain a 3% increase in market share, reaching 20% of global production in the first half of 2024.

Conversely, India's market share dropped from 12% in 2023 to 8% in 2024. Meanwhile, African ferro-chrome production faced setbacks due to power shortages and high electricity costs, leading to a 5% decline in output. Despite this, South Africa maintained its dominance in global ferro-chrome exports, with a 58% share in the first half of 2024, albeit slightly down by 1% from the previous year.

Future Challenges and Price Outlook

While increased consumption in China and India bolstered demand for ferro-chrome in 2024, slowing economic growth in China is projected to reduce consumption in 2025. Meanwhile, intensified competition from Kazakh and Indonesian producers is expected to further pressure prices.

Indonesia has significantly ramped up its production, achieving a 25% growth in 2024 and reducing its reliance on imports. This expansion aligns with China's increased capacity, also projected to grow by 25% in 2024. However, global production growth outside these regions remains modest at 11%, primarily driven by India.

Market participants at the ICDA conference expect ferro-chrome prices to continue trending downward due to the supply surplus. Many believe the market has yet to reach its price floor, as the industry adjusts to post-COVID normalization and increasing competition.