Chinese ferrochrome producers have raised offer prices since last week on steady May 2012 purchase prices from major stainless steel bar mills. Today the spot prices for high carbon ferrochrome rose to CNY 7800 per tonne.
Global demand and prices for chrome ore and ferrochrome, a key ingredient for making stainless steel, is likely to continue to increase in 2012. Furthermore, the surge in oil prices, inflation and fluctuations in currency prices cannot be overlooked.
High oil price has set the stage for even sharper increases in the costs for mining and transportation of chrome ore ingredient for ferrochrome. Many chrome ore companies in Kazakhstan, India, Turkey, South Africa, Oman, Pakistan and Albania have reduced mining the chrome ore do to low price and high costs of production.
This will effect the global chrome ore prices and ferrochrome production. The concern over the depleting reserves of the chrome ore in India, the steel ministry has demanded a complete ban on chrome ore exports. Global ferrochrome producers achieved near 20% increase in the ferrochrome price from USD 1.15 per pound in the first quarter of 2012 to USD 1.40 per pound in the May 2012, driven by reduced supply in the global market.
Strong economic growth and urbanization in China, India, Brazil, Turkey, Indonesia, Saudi Arabia, Russia and other nations are expected to create growing demand for stainless steel in 2012. The chrome ore and ferrochrome prices will increase do to strong demand and problems with export ban and the high costs of production. Also, chrome ore shortages are expected in China as Zimbabwe has banned the export of chrome ore.