Samancor Chrome, one of the world’s biggest ferrochrome producers, has declared force majeure because of South Africa’s 21-day coronavirus lockdown, removing further supply from global chrome markets.
South Africa ordered all underground mines and furnaces be put on care and maintenance status from midnight on March 26 as part of its measures to contain the spread of the virus.
The country is the world’s biggest producer of chrome ore, an essential ingredient in stainless steel, and last year supplied 12.5 million tonnes to China – 83% of China’s total chrome imports.
Samancor has annual capacity of about 1.2 million tonnes of ferrochrome and chromite ore, its website said.
A company spokeswoman confirmed that Samancor had declared force majeure to customers in an emailed response to Reuters questions after similar moves by other producers.
Chrome and platinum producer Tharisa on Friday declared force majeure on its chrome concentrate sales agreements, while Jubilee Metals, another chrome producer, put all its operations under care and maintenance.
“We’ve been able to clear all the chrome stocks we had available,” Jubilee CEO Leon Coetzer told Reuters.
“We’ve slowly wound down our contractual commitments so we didn’t have to declare force majeure.”
Glencore, which runs a ferrochrome smelter in Rustenburg in a joint venture with Merafe Resources, last week said that all its ferroalloys operations in South Africa would transition to care and maintenance from March 26.
A Glencore spokesman declined to comment on whether the joint venture had declared force majeure on chrome shipments.
SUPPLY FACTORS
South Africa’s three-week coronavirus lockdown is depriving China of its main supply of chrome ore, but stainless steel producers there say they have more than three months’ worth of material – nearly 4 million tonnes – stockpiled in ports.
A shock to chrome supply would normally drive up prices, but confinement of much of Europe and the United States in response to the coronavirus crisis has depressed demand for cars, appliances and other stainless steel products.
“The lockdown in South Africa supports the price but hasn’t driven the price up,” said Ellie Wang, senior analyst at commodities consultancy CRU Group.
CRU estimates global chrome supply at 36 million tonnes this year. South Africa alone produced 23 million tonnes last year, but that is expected to fall to 21.5 million tonnes this year.
Ferrochrome prices were at their lowest since 2005 in February.
