International Ferro Metals said that it expects ferrochrome prices to remain steady in the near term, with a potential to increase, driven by surging global demand for stainless steel.

Prices of ferrochrome FECRO-HC-RU FECRO-LC-RU, used in stainless steel to prevent corrosion, jumped to their highest in more than two years in February on strong demand, but the ferrochrome market softened after the disaster in Japan and the Middle East unrest.

Mr David Kovarsky CEO of International Ferro Metals said that "I don't think they (prices) are going to weaken any further. I think they have got a greater potential to strengthen than to weaken."

South African group Merafe Resources, the country's largest ferrochrome producer, said late in March 2011 that second quarter European benchmark ferrochrome prices would rise 8% from the first quarter to USD 1.35 per pound.

Mr Kovarsky said that IFM, which has cut costs by 10% from last year as part of its cost reduction program, also expects to generate a further 5% in cost savings this year.

Daniel Stewart analyst Mr Martin Potts, who has a buy rating on the stock, said IFM's cost reduction program was starting to show results.

Mr Potts said that "We still see considerable stock price upside, but this is contingent on stronger ferrochrome prices and a successful furnace rebuild program."

The company, which was forced to shut down operations at its two key furnaces for repairs in January, expects to lose about one and a half months of production due to the shutdown.

IFM's third quarter sales of ferrochrome fell to 48,420 tonnes, from 64,063 tonnes in the year ago quarter. A year ago, sales were unusually high as the company was clearing excess inventories.

(Sourced from www.reuters.com)