Chrome Prices Predicted to Recover in 2013

Chrome Prices Predicted to Recover in 2013A six-month slide in ferrochrome prices is expected to reverse in early 2013, according to Turkish ferrochrome producer Eti Krom. Ferrochrome, an alloy of chromium and iron, is an ingredient of stainless steel. 

Metal-Pages reported that the Turkish firm said that producers should be able to take advantage of higher prices in the first quarter of 2013 due to lower South African production caused by strikes at platinum mines where chromite ore is a by-product.

The company is forecasting prices rising from $260 to $265 a tonne in January to $270 to $275 a tonne in February and $280 to $285 a tonne in March for 42-percent grade lumpy ore on cost and freight.

Spot ferrochrome prices have been slumping in recent months due to weak demand from the steel industry, particularly in Europe. Year-end numbers from the European car market, an important target for chrome producers, paint a bleak picture. Sales are down for the 14th straight month, with French, German and Eastern European auto manufacturers having been hit the hardest, according to an article published on euronews.

But producers should be in better shape come the new year, especially with strong demand from China, a key chrome consumer.

“Chinese buyers will demand more higher grade of concentrate ore and low grade lumpy ore from Turkey, Pakistan and Albania,” Robert Yuksel Yildirim, Eti Krom president, said in a statement.

The Chinese market for chrome is already starting to pick up, notes Metal-Pages, which reported that Chinese high carbon ferrochrome prices have risen due to increased electricity prices. As of December 18, Chinese ferrochrome HC Cr 50 percent is up 1.39 percent and is trading in the range of 7,100 to 7,300 yuan. European charge chrome 52 percent Cr is unchanged at $1.10 a pound.

There was also potential good news for chromium explorers, according to a report from Reuters that states that Kazakhstan — which holds the world’s largest chromium reserves along with substantial bauxite, copper, iron ore and zinc — could lift its moratorium on issuing licenses for new mineral deposits.

Company news

South Africa-based Samancor Chrome was approved by the country’s Competition Tribunal for the acquisition of a 50-percent stake in Nippon Denko’s NST Ferrochrome joint venture. NST produces ferrochrome for export to Japan.

Merafe Resources (OTC Pink:MRAFY), a South African ferrochrome producer, and Switzerland-based Xstrata (LSE:XTA) will close five of 20 furnaces between January and March of 2013 to help power utility Eskom manage a tight electricity supply. The shutdown will cause 100,000 tonnes of lost production but “will be mutually beneficial to Eskom and the venture and will not result in job losses at these furnaces,” Merafe said in a statement. Merafe and Xstrata have a joint venture to supply ferrochrome to stainless steel mills in Europe, America, China, Japan, Taiwan, Korea and South Africa.

Posco (NYSE:PKX) said it is not interested in buying the ThyssenKrupp stainless steel plant in Italy despite rumors that the Korean steel giant wants to increase its presence in Europe, Reuters reported.

Tata Steel (BSE:500470) is getting into the US ferrochrome market through an agreement with Promet Group. The Indian steel producer “has made long-term proposals through Promet and has material in the United States,” industry sources told Metal-Pages last week. Another Indian company, MMTC, has invited tenders for the export of 160 tonnes of chrome concentrate. The firm is the designated state exporter of chrome ore, chrome concentrate, and manganese ore.

Junior company news

Noront Resources (TSXV:NOT) said it has agreed to sell its 25-percent interest in the Windfall Lake project, in Quebec, Canada to Maudore Minerals (TSXV:MAO). Maudore will pay $10 million for the stake plus 3 million warrants entitling Noront to purchase Maudore shares at C$2.20 per share. The project is a joint venture between Noront and Eagle Hill Exploration (TSXV:EAG), which owns the other 75 percent and is the operator. Noront is focused on the Eagle’s Nest polymetallic deposit and the Blackbird chromite deposit, both of which are in James Bay lowlands of Ontario.

Stratton Resources (TSXV:SI) provided an exploration update on its its properties in British Columbia, Canada. The Vancouver-based company identified a 600-by-200-meter target at its MAC project, which contains nickel, iron and chromium, along with molybdenum and copper.

 

Securities Disclosure: I, Andrew Topf, do not hold equity interests in any of the companies mentioned in this article.