Some clients of South Africa's ASA Metals are deferring shipments of ferrochrome amid weak demand for stainless steel, a top official said on Monday.
South Africa is the biggest producer of ferrochrome, a key component in stainless steel to deter corrosion, and firms there have slashed output as the global economic downturn hits demand.
"Some of our customers have requested that we defer some shipments from the fourth quarter to the first and now even first to second," Marketing Manager Ernest Ives told Reuters in a telephone interview.
"Our traditional customers are still taking a bit of the normal volumes but some of them have now asked that the first quarter be skipped totally. I think all in all everybody's going to lose one quarter's business, end of story."
Spot high-carbon ferrochrome prices FECRO-HC-RU have spiralled down by 65 percent to 85 cents a lb since July.
Contract prices, which fell 10 percent to $1.85/lb in the fourth quarter, have not yet been settled for the first quarter.
ASA - 60 percent owned by a subsidiary of Chinese state-owned steel trader Sinosteel Corp - has cut production by 50 percent at its two furnaces, Ives said.
Figures have not been finalised for 2008 output, but it was estimated to be around 124,000 tonnes, he added.
The firm, located in South Africa's northeast Limpopo province, was continuing with its expansion project to build two new furnaces that are due to be commissioned by October, adding 240,000 tonnes of capacity.
"We're definitely going to start up the two new furnaces and if the market hasn't improved substantially, we might take out our old capacity, furnace 1 and 2," Ives said.
A new mine was also being developed to feed ore into the new furnaces.
South Africa's biggest ferrochrome producer, Xstrata, said on Dec. 1 it had suspended more ferrochrome production due to weak market conditions and that total shut furnances accounted for half of annual capacity.
Second-ranked Samancor Chrome planned to shut down all its mining and smelting operations until the end of February, a report said last month.
Source: Reuters
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