FeCr in H2 2026: Supply Returns, Ferrochrome Market Recovery Doesn’t
A year ago, the fear was a supply shock. Today, South Africa has finally secured the power relief its ferrochrome industry has been calling for, smelters are restarting, and jobs have been saved. Yet FeCr prices remain under pressure. One of the major developments for the ferrochrome industry in years has been met with a surprisingly muted market response.
That development is the South African electricity story. After an interim tariff of 87.74c/kWh allowed Lion smelter to restart in February, Eskom agreed discounted electricity rates with South Africa’s two remaining major ferrochrome producers, cutting power costs to 62c/kWh. The deal prompted one of the producers to withdraw planned retrenchments and created a pathway for further furnace restarts.
But while smelters are coming back, exports tell a more complicated story. Chrome ore exports continue to break records, averaging more than 2.4 million tonnes per month since March and rising nearly 39% year-on-year in H1. Ferrochrome exports, meanwhile, remain more than 50% lower than a year ago despite a sharp rebound in April as Lion ramped up production. South Africa has restored power faster than it has restored its position in the ferrochrome market.
*FeCr export data for May–Jun 2026 not yet available at time of writing. Source: UN Trade Data;
Supply and demand dynamics in China, the largest producer and consumer of ferrochrome, remain the key driver for the ferrochrome market. High-carbon FeCr tender prices have continued sliding, reaching their lowest levels since August 2025. What’s striking is that stainless steel demand is not the main issue. Stainless production in China grew by more than 5% in the first half of the year. The challenge is supply. Domestic ferrochrome production has expanded at a faster rate, leaving the market oversupplied and reducing China’s reliance on imported material as buyers favour locally produced tonnes.
That said, the latest round of bidding prices may finally be forcing a supply response. In recent weeks, FerroAlloyNet has reported a series of furnace shutdowns and maintenance outages across Inner Mongolia, Guizhou and Guangxi, driven by technological upgrades, maintenance schedules and increasingly severe cost pressure. Taken together, the affected furnaces represent around 34,000 tonnes of monthly FeCr output capacity, equivalent to roughly 408,000 tonnes on an annualised basis, or approximately 4.4% of China’s 2025 ferrochrome production. While some of these outages are temporary and the actual production loss will be lower, they suggest that current price levels are beginning to test producer economics. For the first time in months, the market may be seeing the early signs of a supply-side response rather than yet more growth in output.
India, meanwhile, is quietly becoming one of the most important long-term stories in the market. Stainless and crude steel capacity continue to expand, supported by investments from major producers and alloy suppliers. As domestic demand grows, an increasing share of Indian ferrochrome is being consumed at home rather than exported. Exports have already fallen sharply from 2023 levels, and the idea of India eventually becoming a net ferrochrome importer no longer looks far-fetched. Unlike the cyclical swings in China or South Africa, this is a structural shift that could reshape trade flows for years.
At the same time, the gap between China and Western markets continues to widen. European pricing has remained relatively resilient, supported by trade protections and CBAM-related adjustments, even as Chinese spot prices weaken. While CBAM is still in its early implementation phase, it is already influencing procurement strategies and forcing greater scrutiny of embedded carbon costs across the stainless-steel value chain. For ferrochrome suppliers, this increasingly means that competitiveness is no longer determined solely by price, but also by carbon intensity and the ability to provide transparent emissions data.
As the result, European and Chinese markets are beginning to respond to different sets of incentives, with CBAM increasingly creating market dynamics that are distinct from both China and the United States. Ferrochrome demand, pricing and trade flows are now being shaped by three major centers of gravity: China, the US and the EU, each with its own policy, trade and economic drivers. With these markets accounting for the majority of global ferrochrome demand, the idea of a single “global” ferrochrome market is becoming increasingly difficult to defend.
South Africa has also reopened the beneficiation debate, floating proposals that could include ore export taxes, export quotas and tighter permitting requirements. The industry remains divided on whether such measures would strengthen local smelting or simply increase costs, but the discussion alone highlights growing political pressure to create more value domestically rather than exporting raw ore.
The market entering H2 2026 looks almost the reverse of the one we described a year ago. Back then, the risk was complacency ahead of a supply shortage. Today, the supply-side rescue has arrived, but pricing power remains firmly in China’s hands.
The key questions are straightforward: how many South African furnaces restart under the new power agreements; whether Chinese stainless demand can absorb ongoing ferrochrome oversupply; and whether beneficiation policies move from discussion to implementation.
For now, the outlook is clear. South Africa has finally solved one of its biggest problems. The challenge is that solving the power crisis has brought supply back just as the market is struggling with too much of it. Glass half full for South African smelters. For the broader ferrochrome market recovery, the glass is still filling.