Glencore released its H1 2022 attributable ferrochrome production statistics of 786kt, placing FeCr among five commodities that saw improved performance compared to last year.

Glencore is the majority joint venture partner of Glencore-Merafe, which operates the largest capacity of ferrochrome furnaces globally alongside Chinese-owned Samancor Chrome, both based out of South Africa. China and Indonesia are the main destinations for ferrochrome production out of South Africa, servicing the burgeoning stainless steel industry. Ferrochrome prices have been elevated since end-2020, following disrupted global supply chains in the wake of the COVID-19 pandemic, and soaring logistics and energy costs. However, prices are showing a divergence based on regional differences.

In China, the main market for ferrochrome, prices are elevated compared to historical levels, but only the lowest cost producers in Inner Mongolia are currently profitable. This follows a trend apparent across the ferroalloys sector in China, where weak demand sentiments have outweighed the typical cost-driven price for bulk alloys. South African plants selling ferrochrome in Chinese markets have had to increasingly face competitive facilities in China with the latest furnace technologies, such that less than a handful of the 14 South African plants maintain a cost advantage, led by Glencore’s Lion plant.

South African ferrochrome producers, however, can also leverage other international markets and Glencore-Merafe sets the European benchmark ferrochrome price every quarter. Supply disruption in Europe and the risk of severe disruptions from Kazakh ferrochrome due to the Russian war in Ukraine have driven record-level premiums for European and US ferrochrome prices. Spot price premiums over Chinese markets have moved to over 140% since June and support high operating rates of operational furnaces in South Africa, many of which faced severe challenges from domestic energy costs to remain profitable just prior to the onset of the COVID-19 pandemic