The Glencore-Merafe joint venture produced 902kt in H1 2023 (attributable 185kt reported by Merafe Resources).  

The joint venture ferrochrome production was down below 400kt output in Q2 for the first time since Q3 2021. The reduction in output was attributed to the planned pullback in production over the 3-month high electricity demand winter season in South Africa. Merafe Resources stated that only the Lion smelter – South Africa’s most cost-efficient smelter – is operating over winter tariffs. 

Rising energy costs in China have allowed South African ferrochrome plants to regain a competitive advantage in the Chinese ferrochrome market, buoyed by a struggling EU stainless steel industry that saw South African exports to China ramp up. However, the weaker than expected recovery of the Chinese market has added downward pressure on Chinese ferrochrome prices that with the winter electricity tariffs and ongoing energy issues in South Africa are turning the South African plants unprofitable at present. 

With supply being restricted from South Africa, the ferrochrome market will tighten quickly, and high costs will drive a recovery in prices over the second half of 2023.