“Last Men Standing” from “Magnificent Seven” of a decade ago
In 2014-2015 South African ferrochrome industry had 7 major producers, with installed FeCr capacity over 5 million tonnes annually. Now there are only 2 left (with around 4 million tonnes of installed capacity), while others completely shut down.
Due to current market conditions, the remaining producers are struggling to continue operations.
In the beginning of 2025, both Samancor and Glencore-Merafe announced that they are expecting to cut FeCr production. While Samancor did not indicate the level of cuts, recently Glencore-Merafe stated that these cuts could reach 2/3 of the current production level, or almost 1 million tonnes.
The main reasons for this announcement could be attributed to the following:
• Depressed market for chrome related products, with global prices hovering at the lowest level since 2021
• Significant increase in price of electricity in South Africa, around 700% over the last 10 years, and expectation that electricity prices continue to rise in foreseeable future
• Rapid expansion of FeCr production in China, which has enough capacity to fulfill its domestic needs
• Rapid expansion of stainless-steel production in Indonesia based on captive FeCr production
• Increased competition from producers with a lower cost of production
• Prices for Chromium ore remain at a high level, thus making sales and export of Cr ore more profitable than smelting FeCr.
If announced cuts indeed become reality, could other FeCr-producing countries substitute this drop in Ch Cr production?
Let’s examine if that is possible, and what countries have potential to do that:
• Kazakhstan is already operating close to full capacity and does not produce charge chrome.
• India has sufficient capacity, but with improved domestic demand and stable prices, India started to decease export of ferrochrome (36% drop in 2024 vs 2023). Also, ferrochrome industry in India relies on domestic chromium ore, and there are some issues with sufficient access to this material.
• The rest of FeCr producing countries (not counting China) combined production is around 1.5 million tonnes, with some of them producing Ch Cr, some HG HC FeCr and some LG HC FeCr. Even though there is spare capacity, that has been idle due to current market conditions, we don’t believe it will be enough to cover for South Africa.
• Zimbabwe has enough chromium ore reserves to ramp up production. Unfortunately, it also faces electricity shortages like RSA. In addition, it requires ports of neighboring countries (mainly RSA) to export material, which exposes it to problems that plague logistics companies, such as Transnet.
• Another potential country could be Indonesia, that last year imported almost t2 million tonnes of chromium ore to support domestic FeCr production for the stainless-steel industry. While Indonesia is absent from the seaborne market, given its rapid expansion in the stainless-steel industry, we except it to have enough capacity to star exporting, especially with low cost of production or significant export duty (compared to 40% in China).
One of the markets where substituting ferrochrome from South Africa could become tricky is USA. With the latest announcement, import tariffs (for major imports of FeCr in UAS) for certain goods are:
• South Africa – 30%
• Finland – 20%
• Kazakhstan – 27%
• Albania – 10%
• Brazil – 10%
• India – 26%
• Sweden – 20%
• Oman – 10%
• Zimbabwe – 18%
• Turkey – 10%
While chrome related products as well as majority of ferroalloys are currently excluded, there is no guarantee that this decision will stand. Especially with the possibility of FeCr production restarting in the USA. In any case it doesn’t add clarity to the development of the ferrochrome market.
As one can see currently it will be difficult to substitute drop in ferrochrome production left in South Africa. This could lead to a significant shift in the supply/demand balance, leading to the undersupply of FeCr in mid-term, which in turn could lead to a rebound in some regional FeCr prices. While it might not necessarily revive production in South Africa, price improvement might push other ferrochrome producing countries to start/increase export of this material.