Steel Slowdown To Cut Ferro Chrome Intake

The export market for chrome ore is likely to be subdued during the second half of 1997-98 mainly due to higher stocks of stainless steel and lesser demand for raw materials to produce stainless steel according to Sandipan Chakravortty executive in charge of Tisco for Ferro Alloys and Minerals.

He feels that owing to general slowdown in stainless steel production there will be marginal reduction in high carbon ferro chrome consumption. Nevertheless the Tatas are targeting to export 100,000 tonnes of ferro chrome during whole of `97-98.

To meet the above target of export, Tatas will produce around 50,000 tonnes of H C ferro in their plant at Bamnipal. They will also produce another 50,000 tonnes through conversion contract with other ferro producers.

Despite a cut in the lease area of chrome mining, Tatas are planning to produce around 650,000 tonnes of chrome ore of which 535,000 tonnes would be friable ore and the rest lumpy.

Planned exports of chrome ore and concentrates would be around 270,000 tonnes. However, actual exports have been only 84,000 tonnes during April- June `97.

Owing to the high cost of power in the country, the Tatas are pursuing conversion agreements for ferro chrome in low power cost countries and around 8-10,000 tonnes of ferro chrome is likely to be produced during `97-98.

Global outlook for ferro chrome: The world installed capacity for high carbon ferro chrome is around 4.7 million tonnes in `97. Production is likely to be around 3.42 million tonnes with a capacity utilisation of 73 per cent compared to 63 per cent in `96. There may be a slight improvement in capacity working if the demand remains high.

South Africa has seen the biggest increase in installed capacity where the capacity has now reached 2.5 million tonnes or nearly 54 per cent of the western world capacity. This may reach around 2.6 million tonnes in `98.

The CIS and other eastern block countries have been large exporters of ferro chrome, China also has contributed to the surge in exports and in `96 the exports from these countries were around 425,000 tonnes. Therefore there can always be an element of over supply in the world ferro chrome market

Lower Profits: Most of the South African ferro chrome producers are seeing a sharp drop in profits. Chrome Corporation, a large producer of ferro chrome saw its revenues rise by 60 per cent to rands 415 million but profits dipped by 55 per cent in six months ending June `97 at rands 22.35 million.

Another large producer of ferro chrome Consolidated Metallurgical Industries also saw its profits fall despite an increase in sales.

Profits fell from rands 185 million to rands 31.6 million due to a 33 per cent fall in ferro chrome prices.

New ferro chrome venture:Oman which has chrome ore reserves is building a 50,000 tpy ferro chrome plant and a 19,5000 ferro silicon plant at a cost of US $ 80 million.

It is being developed by a local industrial house with participation from foreign investors.

The plant will take around 20 months to come up. Chrome ore production will be increased to 100,000 tonnes to meet the needs of the plant.