How to Invest in Chromium
Interested in how to invest in chromium? Learn about supply and demand dynamics and ways to get exposure to this industrial metal.
Chromium is a tough, gray material that has a high resistance to heat, corrosion and decomposition.
It is one of the more durable metals available, and is an integral component in stainless steel, which is used in infrastructure and machinery and supports construction activity around the world.
Although it's not as well known as some metals, chromium can be a compelling investment opportunity. To help those interested in the space, we’ve put together a brief guide on chromium supply and demand dynamics. Read on to learn more about how to start investing in this industrial metal.
How to invest in chromium: Supply and demand dynamics
The global chromium market is expected to reach US$17.37 billion by 2027 due to higher steel sector demand.
More than 95 percent of chromium demand comes from metallurgical applications, with stainless steel representing the vast majority of consumption. Stainless steel production also requires large amounts of iron ore.
"Worldwide, the consumption of chromium as an alloy for stainless steel is rising," according to BCC Research. "An increase in the demand from the steel industry has led to drive the market for chromium during the forecasted period. Chromium has a wide range of applications in various industries such as the automobile industry, defense, aerospace, building & construction, marine, and electronics."
As the leading producer of stainless steel and ferrochromium, China is the largest consumer of chromium. The US purchased US$850 million, or 5 percent, of global chromium supply in 2021.
In terms of supply, the majority of the world’s chromium production originates in South Africa, Turkey and Kazakhstan. According to the US Geological Survey, South Africa produced 18 million metric tonnes of chromium in 2021, beating out the rest of the world’s chromium producers by a wide margin.
Interestingly, South Africa used to be the world’s largest producer of ferrochrome as well; however, it lost that title in 2012 to China due to power supply constraints.
One of the niche uses of chromium is as an alloy in dental restorations. While gold and ceramic alloys are more common in industrialized countries, developing nations often use an alloy mix of nickel and chromium when performing dental fillings as these materials are more affordable.
How to invest in chromium: Ways to start
Chromium investing can be challenging, as this lesser-known metal is not traded on any public exchanges; as a result, owning the physical metal is difficult, risky and generally not recommended.
For that reason, many investors interested in chromium investing choose to buy shares of companies engaged in ferrochrome production. The largest publicly traded producer is major miner Glencore (LSE:GLEN,OTC Pink:GLCNF), which produces the metal in South Africa.
It is also possible to buy shares of smaller companies focused on chromium exploration and development activities, but finding and evaluating these companies requires research and extensive due diligence.
This is an updated version of an article first published by the Investing News Network in 2011.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.