MERAFE: State of ferrochrome market

Growth in global stainless steel melt rates reached a decade high in the first half of 2021 (“H1 2021”) as output increased 28% year-on-year (“YoY”) to 30 million tons. Strong growth has been observed in all producing regions, particularly in China, as output increased 26% to 17 million tons.

Indonesia also increased production significantly on the back of capacity increases and will become the second largest stainless steel producing country in the world, as annual output is expected to increase to 5.2 million tons, up from 2.7 million tons in 2020.

Strong demand coupled with significant raw material input cost increases have supported high stainless steel pricing in H1 2021.

Primary ferrochrome consumption globally increased 23% in H1 2021 YoY to 7.4 million tons^, while ferrochrome production increased 20% to 7.1 million tons. Domestic ferrochrome production in China has been constrained due to power reform policy, leading to a 10% increase in imports in the first 5 months of 2021.

South African ferrochrome exports increased 37% year-to-date (“YTD”) May 2021 to 1.7 million tons.

Global ferrochrome stocks in weeks of consumption have almost halved YoY to 10.3 weeks at the end of H1 2021.

Chrome ore exports from South Africa increased 25% YTD May 2021 to 6 million tons. Higher ocean freight rates and a stronger ZAR:US$ exchange rate negatively impacted South African chrome ore miners as port stocks in China remain unchanged at 3.65 million tons compared to a year before.

The European ferrochrome benchmark for H1 2021 averaged 135.5 US cents per pound, an increase of 26% from the H1 2020 average of 107.5 US cents per pound.


Global economic growth has been rapid to date. The sustainability of this growth depends on several factors including the success of the COVID-19 vaccine rollout programs. While in several parts of the world, the COVID-19 vaccination drive is starting to pay off and normality is gradually being restored, there are several parts of the world, including South Africa, where the COVID-19 pandemic is still wreaking havoc on communities and businesses.

The recent unrest adds to the uncertainty faced by the country.

The strong growth in stainless steel demand is a positive development and has been key to the buoyancy in the ferrochrome market. Merafe operations are ready to respond to this demand should it be sustained for the rest of the year.

The company however remain cautious in its approach to the year and will continue to focus on efficient operations, cash preservation, cost control and efficient capital allocation.

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