MERAFE Resources said that benchmark ferrochrome prices for the coming quarter remained nearly flat, rising just 2% to USD 1.125/lb dashing hopes that reduced supply would help prices rebound.
Merafe announced last Wednesday that ferrochrome supply during the first three months of the coming year would be reduced by 100,000 tons after its decision to temporarily close five of its 20 furnaces to participate in Eskom’s electricity buyback offer.
Prices for the December quarter dropped nearly 14% from the June quarter’s USD 1.25/lb, which in turn were 8% lower than the March quarter’s USD 1.35 /lb.
Ms Zanele Matlala CEO of Merafe said that Eskom’s power buyback program had "resulted in a supply squeeze". She said the company did not expect any supply disruptions for customers.
The electricity buyback program helped Merafe recently report a rise in first-half profit, despite production falling 21% in the six months ended June.
No retrenchments would arise as a result of the buyback arrangement. She said that "For the rest of the operations, this will be dependent on market conditions.”
Merafe and its joint-venture partner Xstrata have said that the temporary shutdowns would be mutually beneficial to it and Eskom and result in job losses at these furnaces.
