- Power tariffs finalised at 62 c/kWh
- Higher exports may pressure ferro chrome prices
South Africa’s ferro chrome industry is preparing for a fresh production ramp-up after the Glencore-Merafe Chrome Venture secured a negotiated electricity pricing agreement with Eskom. The agreement provides the venture with a stable three-year electricity tariff of 62 c/kWh, enabling the restart of the Boshoek and Wonderkop smelters. The development marks a significant step towards reviving idle ferro chrome capacity after elevated power costs forced several furnaces to shut down.
As South Africa is one of the world’s significant ferro chrome producer and exporter, the agreement is expected to improve smelter profitability by reducing power costs and providing greater pricing certainty. Although production is likely to recover in phases, market participants expect ferro chrome availability to improve during the second half of 2026.
Chrome ore market remains well supplied
The restart comes at a time when UG2 chrome ore prices declined by around $25/t m-o-m CNF Tianjin levels in June, reflecting improved ore availability. South Africa exported around 9.31 mnt of chrome ore during January-April 2026, compared with 6.29 mnt in the corresponding period last year. In contrast, the country’s ferro chrome exports declined 27% y-o-y to 0.65 mnt, highlighting the widening gap between ore exports and domestic value-added production.
Global ferro chrome market could rebalance
Global ferro chrome trade volumes contracted sharply by 26% y-o-y to 5.38 million tonnes (mnt) in CY’25 from 7.29 mnt in CY’24, as production disruptions in South Africa coincided with slower stainless steel growth, weaker Chinese import demand, and falling benchmark prices.
Higher South African ferro chrome production could gradually increase export availability. Buyers, particularly across Asia, may gain stronger negotiating power as additional material enters the market. At the same time, increased South African exports could intensify competition among global suppliers and limit further price gains, especially if stainless steel production and consumption fail to keep pace with rising ferro chrome supply.
Implications for India
The restart could create mixed outcomes for the Indian market. Domestic ferro chrome producers may face stronger competition in export destinations as South African suppliers return with additional volumes backed by lower electricity costs. However, Indian stainless steel producers could benefit from improved raw material availability and potentially softer ferro chrome prices, helping reduce input costs if global supply continues to improve.
In CY’25, India’s ferro chrome exports fell 14% y-o-y to 0.48 mnt as weaker Chinese demand and lower prices reduced export realisations.
Outlook
Market participants will closely monitor the pace of furnace restarts, ferro chrome export volumes, and stainless steel demand over the coming months. While the new electricity tariff provides a strong foundation for South Africa’s production recovery, the overall impact on prices will depend on how quickly idle capacity returns and whether global stainless steel demand is sufficient to absorb the additional ferro chrome supply.
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