Outokumpu has announced its plan to cut ferrochromium production by 20% at its Tornio plant in Finland, attributing this decision to a sluggish stainless steel market and elevated ferrochrome inventories. 

The 2023 European stainless steel market witnessed a production decline in tandem with a weakened macroeconomic outlook, resulting in a 13.4% year-on-year decrease during the first half of the year. This downturn was exacerbated by subdued demand and led to unexpectedly high ferrochrome inventories. Outokumpu, a key player in the European market, relies on its own ferrochrome production sourced from its wholly-owned Tornio plant and integrated Kemi mine to supply its stainless steel products.

In contrast, other European stainless steel producers depend on third-party ferrochrome, largely imported from South Africa and Türkiye, leaving their mills vulnerable to industry-related risks. Ferrochrome prices in Europe have been elevated since end-2021, when energy prices underpinned a sharp increase. However, prices in China have continued a downward trend, following record ferrochrome output levels in 2023, adding pressure to higher costs across ferrochrome operations globally. The ramp-up in China’s ferrochrome output has elevated the prices of chromite ores and concentrates, adding further pressure to the already tight margins of ferrochrome production.

Glencore-Merafe setting the quarterly European ferrochrome benchmark down by 5.9% for Q1 2024, illustrates the ongoing challenges faced by the ex-China stainless steel industry. Consequently, one of the three operating furnaces and one of the two sinter plants at the Tornio plant will remain offline until the autumn season in the northern hemisphere. Project Blue expects a modest recovery in stainless steel production for Europe; however, growth in China will remain the primary driver for the industry, continuing to shape global market dynamics.