TEX reported that South Africa has monopolized a 77% of chrome reserves in the world but South African producers of Ferrochrome have been suffering from the difficulties to operate at a profit. The benchmark price of South African charge chrome settled with stainless steel companies in Europe and Japan for shipments in July to September 2011 quarter has been reduced by 15 US cents per pound of Cr, which has become the very low price since January to March quarter of 2010, and this reduction of the benchmark price has a possibility to put a pressure on operations at South African producers, excluding some of major ones.

Major stainless steel companies in Japan and Europe did not intend to reduce the benchmark price of South African charge chrome for July to September 2011 quarter. The negotiations in Europe on price of charge chrome for the quarter had rough going as an exceptional case and were brought in July. In the course of time, Japan preceded this subject and settled the price for July to September 2011 quarter. In the last 30 years, by means of utilizing its advantages, South Africa had overwhelmed the ferrochrome industry of the world and expanded their share in the global production of ferrochrome through having driven the ferrochrome industry in other countries to stop their production.

However, the monopolization rate in the world production of ferrochrome held by South Africa has retreated in the recent years. The share of Ferrochrome for South Africa was 42% to 43% in 2006 to 2007 but declined to 33% to 38% in 2009 to 2010. The main reason for this decline of the share is thought to be the regulations for supply of electric power enforced in South Africa.

An unexpected crisis of electricity occurred on the end January 2008 in South Africa has come up to the surface and this trouble has caused the wall for projects to invest on a long run, because it has become difficult to secure new supply of electric power. The allocation of electricity for new projects in South Africa has been frozen for the 5 years until 2012.

However, a possibility to extend this frozen allocation to 2015 is arising at present. Also, Eskom has raised sharply electricity fees from 2008 and the electricity fees in South Africa were once said to be lower than those in Canada but this change of electricity situation in South Africa has thrust the anxious factors to a growth of the industries to consume more electricity (such as ferro-alloys).

(Sourced from TEX Report Limited)