London: UK, June 25, 2020 (GLOBE NEWSWIRE) -- The COVID-19 pandemic is set to impact the chromium industry much like most markets experiencing intermittent suspensions, however, it seems that the pending supply deficit is more likely to be softened because of the virus. The impact on chromium demand in stainless steel globally, while supported with stimuli in China, will see a decline back to 2017 levels and soften the impact of ferrochrome furnace closures headlining in South Africa. South Africa has faced over a decade of rising production costs and loss of competitiveness related to increasing electricity tariffs and the need to invest in systems that allow for a secured and consistent power supply in the wake of rolling blackouts, dubbed “load shedding”. While COVID-19 has reduced the load on the national electricity grid and halted load shedding for a short time, producers in South Africa seem to have used the lockdown to fast track closures of plants. In the meantime, global economic trends in the oil and gas industry and exchange rates have lowered US$-equivalent costs across the board and saved most marginal producers from closing permanently thus far this year. As a result, and including the exposure to Chinese stainless steel markets, the chromium industry will see limited lasting impacts directly due to COVID-19.
Roskill: Three-year consecutive surplus ferrochrome market will shift into deficit in 2020
The ferrochrome market moved into a third consecutive year of oversupply following a surge in prices at the end of 2016, which was underpinned by demand from China. Sustained demand growth saw both chromium ores and ferrochrome supply reach annual records year-on-year, keeping pace ahead of demand and building an overhanging surplus. The surplus supressed prices in 2019 for both ore and ferrochrome, causing nearly half of supply to operate at a loss towards the tail-end of the year. In response to prolonged low prices, the market seemed poised to rebalance in 2020 as producers started cutting production prior to the outbreak of COVID-19.
| Source: Roskill Information Services Ltd