Huge stockpiles of ferrochrome and the slowdown in global steel production means that the suspension of 80% of the Xstrata-Merafe joint venture’s ferrochrome capacity may not be enough said Samancor Chrome chairman Dankor Konchar on Friday.
Samancor Chrome has suspended all its ferrochrome capacity until 1 March at the earliest as has the London-quoted International Ferro Metals. Other producers have also cut most of their production.
The Xstrata-Merafe joint venture is the biggest ferrochrome producer in the world, with about 20% of the market, followed by Samancor with a 13% share.
Xstrata Alloys said it had suspended operation of another six furnaces, adding to the 11 suspended last month , because of current market conditions. That meant that 1,37-million tons or 80% of operating capacity had been put on hold.
No retrenchments of permanent employees was expected, which meant the joint venture could return to capacity quickly when market conditions allowed, it said.
Konchar said Samancor Chrome, which employs about 6500 people including contractors, would do everything possible to avoid retrenchments.
The company was in discussions with the unions and various options, such as working shorter hours, would be explored.
Samancor Chrome had responsibilities to both employees and shareholders, he said.
London-based investment house Fairfax said in a note to clients that the closure of further furnaces showed the poor state of the market. It expected ferrochrome producers could remain shut for the first six months of this year while the stainless steel industry worked through stockpiles.
Konchar said he had never seen conditions as bad as this in the ferrochrome industry.
Source: Business Day
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