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Xstrata Q1 ferro-chrome output falls 20% amid Eskom deals

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Ferro-chrome production at Xstrata Alloys fell 20% year-on-year in the first quarter, as a result of maintenance rescheduling and power buyback deals with South Africa’s state power group Eskom.

Total ferro-chrome production in the first quarter of 2012 reached 252,000 tonnes, compared with 316,000 tonnes for the same period in 2011.

Eskom has called on major producers to shut furnaces and sell power back to the national grid, leading to tighter ferro-chrome supply in Europe, even as the Chinese market remains subdued. 

The supply reduction helped producers achieve a 17% rise in the benchmark price for high carbon ferro-chrome and charge chrome, but cost pressures are still a challenge, Xstrata said.

“Margins, however, remain under pressure as a result of continued strong mining inflation, increased standing charges and a relatively strong rand compared with the US dollar,” the company said. 

High carbon ferro-chrome is trading at $1.16-1.22 per lb on a delivered basis in Europe, compared with $1.05-1.15 at the start of the year.

Janie Davies
jdavies@metalbulletin.com
Twitter: @janiedavies_mb

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