Suppliers of chemical and foundry grade chromite materials
have been in an uncomfortable position in 2021 after chrome ore
and ferro-chrome counterparts have raised their prices twice in
the past six months. Chromite suppliers are largely unable to
follow in the same direction with their own quotes.
Prices for metallurgical grade UG2 chrome ore rose by
almost 40% during the first quarter of 2021, driven by Chinese
demand and a gap in local supply. Chromite prices showed much
Fastmarkets’ assessment of the foundry
wet bulk price rose by 13% between January and March, while the
dried-and-bagged price assessment increased by 7% in the same
period. Both prices fell from April to May following their
short-lived increase. Sellers were largely unsatisfied with
this performance, since the rally in chrome ore prices had been
of a much larger magnitude.
Chrome ore prices rose from June and continue to be
firm. Chromite prices also increased slightly, but remain
unable to follow the sharper upward movement of the
Sources attribute this to both supply and demand
issues. "Demand continues to be the main driver of price
performance for chemical and foundry chromite," one South
African producer said. "Inconsistent buying patterns are making
it difficult to raise offers in a meaningful way."
Supply has already reduced from 2020. From the first
Covid-19-related lockdown in South Africa in April 2020 onward,
several mines – particularly small- and medium-sized
operations – closed and did not reopen. Likewise, some
independent third-party processing facilities that used to
process the material from the smaller mines closed.
"While it’s true that some supply has
fallen by the wayside, that lower total volume has still been
too much, given the current state of demand in some
destinations," one trader said. "That has affected the
international pricing pattern."
Recent developments may have ripple effects on the
supply structure of the global market, several sources said. In
early July, South African miner Chrometco filed for a
restructuring of its business and put its chrome mining and
washing operations – which were run by Sail Group
– on care and maintenance due to financial
Sail and Chrometco were supplying both the
metallurgical market and the non-met foundry market. Sources
estimated that Sail’s monthly shipments to China
averaged 90,000-100,000 tonnes.
Market participants suggest that the effect on the
foundry sand market may be more pronounced than the effect on
the large chrome market. A substantial amount of foundry sand
consumed in China originated, directly or indirectly, from the
coarse chrome ore that Sail shipped. The company operated its
own screening plant in China, where it processed ore into
foundry sand to supply the local market. It also supplied ore
to other third-party wash plants, again for screening foundry
material sold domestically.
"Once you consider that Sail was behind not just the
volumes their own wash plant had to sell, but was also serving
other screen plants in the country, you see that their weight
on the Chinese foundry market was significant," a second trader
said. "If those units don’t come back,
you’ll have a large consumer, China, where a gap
would open up quite quickly."
Chinese consumers tend to buy much larger volumes than
other destinations – such as Europe, the rest of Asia
or North America – so buying patterns in China have
acted as a leveller to the market in the past, scooping up
extra tonnages and balancing supply elsewhere.
While there may at times be differences in exact
product specifications, because Chinese consumers can normally
handle less strict specifications for their usage compared with
other destinations, the country’s volume of demand
gave it a weight in the global chromite market.
Foundry consumers in the country have been telling
Fastmarkets for several months that their demand for South
African sand remained low because they had sufficient and
cheaper domestic supply from screened material, plus enough
port-side inventories to cover existing and impending
short-term needs. Reported sales of South African foundry
material to China over the past six months have been few and
This might change after Chrometco/Sail put its chrome
mining and washing operations on care and maintenance, if those
operations were to remain shut in the future. Domestic wash
plants would find it difficult to source alternative volumes,
requiring other suppliers from outside. Foundry consumers may
also find it harder to cover their needs solely with locally
screened material, and may have to resort to more expensive
source units directly from South Africa.
This may set several supply wheels in motion. Higher
demand from China may tighten supply in other areas. "We kept
saying that something had to give on the supply front, and a
hole being created suddenly, for the market to reset into a new
workable balance," a second seller said. "Maybe this is
"Any volumes that move toward China from [South
Africa] wouldn’t be heading anywhere else, and
would take away from what will be available in Europe [and] in
the US," a third trader said. "If the lion’s share
of foundry in the Chinese market is not here any more, that
will have some kind of effect."