At the end of 2016, most market participants were waiting to see what would happen in China, the world’s top chromium consumer.
But what ended up happening in 2017? As the year comes to a close, the Investing News Network reached out to Victor Constant, market research analyst at the International Chromium Development Association, to learn more about what happened in the chromium market this year.
While Constant doesn’t provide investment advice or make formal quantitative forecasts about the market, he was able to provide valuable insight into the chromium space. For those wondering about the chromium outlook, his comments are a good place to start.
INN: What key trends did you see in the chromium market in 2017?
VC: Following last year’s destocking in China and the price surge that ensued, prices dropped in the first half of the year as Chinese chrome ore imports and stocks picked up. The industry recovered from last year’s disruption, as illustrated by the continued growth in production, but prices remained volatile, picking up at the end of Q2 and dropping again at the end of Q3.
INN: What were the main supply/demand dynamics in the chromium space in 2017?
VC: As the leading chrome ore importer, the leading ferrochrome producer and the leading stainless steel producer, China remains the main driver of the chrome industry. On the supply side, South Africa is, by far, the number-one global ore producer and exporter. Kazakhstan, Turkey and India have also kept up a steady growth, confirming their role as major players in this market, and Zimbabwe made a remarkable comeback with growth of 231 percent between Q4 2016 and Q1 2017.
Overall, the industry showed considerable growth in 2017. In the first three quarters:
- Chrome ore production was up by 7.9 percent year-on-year
- Ferrochrome production was up by 11.9 percent year-on-year
INN: Any surprises/curveballs that affected chromium that the market wasn’t expecting?
VC: The quick reaction of South African suppliers to meet the increase in demand from China following chrome ore stock depletion led to an increase in South African exports amid the rising prices of Q4 2016. This allowed China to quickly replenish its chrome ore stocks and reassure its ferrochrome and stainless steel producers. When Chinese chrome ore stocks rose, prices dropped dramatically in Q1 2017, going from over $400 per metric tonne to close to $200 in the span of four months.
INN: What do you think was the biggest news in the chromium industry?
VC: First of all, the return of Zimbabwe on the chrome market did not go unnoticed. Government policies aimed at attracting investors and capitalizing on their rich mineral resources have started paying off, and chrome ore production boomed in Q1 2017 with a 231-percent increase from the previous quarter.
Ferrochrome production and exports have also been constantly growing throughout the year, putting Zimbabwe back on the map as one of the major producers and exporters of both chrome ore and ferrochrome. Lastly, the questions related to the new South African Mining Charter as proposed by the South African government and the feasibility of its implementation.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.