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What are the main factors influencing the chromite market?

Release Date:

2022-04-27 17:44

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Originating from the internet

In recent months, chromium ore prices have risen sharply. What factors primarily influence the chromium ore market? According to available data, 90% of chromium ore is processed into ferrochrome alloys, which serve as raw materials for stainless steel and specialty steels, with stainless steel accounting for the largest share. Approximately 5% of chromium ore is converted into chemical chromium salts, while another 5% is used in the production of refractory materials—chromium ores are employed to manufacture chromite bricks, magnesia‑chromium bricks, and other specialized refractories. As these figures indicate, the refractory industry accounts for only a small portion of chromium ore demand, making it largely dependent on the metallurgical sector. China is a major producer of stainless steel; in recent years, its output has exceeded 50% of global stainless steel production. On the supply side, global chromite reserves are estimated at roughly 12 billion tonnes, concentrated mainly in South Africa, Zimbabwe, Kazakhstan, Finland, Turkey, and other countries. South Africa holds the largest share, with about 5.5 billion tonnes—nearly half of the world’s total—while Zimbabwe and Kazakhstan each possess around 1 billion tonnes. Together, these three countries account for 93% of the world’s proven reserves. By contrast, China’s chromium resources are extremely limited, concentrated in several remote western regions, including Tibet, Xinjiang, Qinghai, and Gansu. South Africa remains the primary source of China’s chromium ore imports. However, South Africa faces weak transport capacity and high logistics costs: its two main export ports, Durban and Richards Bay, typically receive shipments via rail, yet railway operations have been plagued by persistent issues in recent years, including safety concerns, cable theft, aging infrastructure due to years of inadequate maintenance, insufficient capacity, limited handling equipment, and elevated service fees. Moreover, South Africa grapples with strained electricity supplies and steadily rising tariffs; in 2021, industrial electricity cost RMB 0.455 per kWh, and if rates rise another 20.5% in 2022, the price could reach RMB 0.55 per kWh, erasing any domestic cost advantage. Overall, the chromium ore market is shaped by a complex interplay of supply constraints, production costs, transportation challenges, and demand dynamics, while also being closely tied to geopolitical developments abroad. The refractory industry consumes only a small fraction of the total chromium ore supply, and, owing to environmental concerns related to chromium pollution, sectors such as cement are vigorously pursuing chromium‑free refractories, further reducing the use of chromium ore in this segment.

In recent months, chromium ore prices have risen sharply. So, what are the key factors influencing the chromium ore market?
According to available data, 90% of chromite ore is processed into ferrochrome alloys, which serve as raw materials for stainless steel and specialty steels, with stainless steel accounting for the largest share. Approximately 5% of chromite ore is converted into chemical chromium salts, while another 5% is used in the production of refractory materials; chromite ore is employed to manufacture chrome bricks, magnesia-chrome bricks, and other specialized refractories.
As shown above, the refractory materials industry accounts for only a small share of overall applications, largely due to its close ties with the metallurgical sector. China is a major producer of stainless steel; in recent years, its output has exceeded 50% of global stainless steel production.
On the supply side, global chromite reserves are estimated at approximately 12 billion tonnes, primarily concentrated in South Africa, Zimbabwe, Kazakhstan, Finland, Turkey, and other countries. Among these, South Africa holds the largest reserves, totaling 5.5 billion tonnes—roughly half of the world’s total—while Zimbabwe and Kazakhstan each have around 1 billion tonnes. Together, Kazakhstan, South Africa, and India account for 93% of the world’s proven chromite reserves. China, by contrast, is severely resource‑poor, with its chromite deposits mainly located in several remote western regions, including Tibet, Xinjiang, Qinghai, and Gansu.
South Africa is the primary source of China’s chromium ore imports. However, South Africa’s transport capacity is weak and service costs are high. The two main ports used for exports are Durban and Richards Bay, with goods typically transported to these ports by rail. In recent years, rail transport has faced persistent challenges, including safety concerns and cable theft, aging infrastructure due to years of inadequate maintenance, insufficient capacity, limited handling equipment, and relatively high railway service costs. Moreover, South Africa is grappling with tight electricity supplies and continuously rising tariffs; in 2021, industrial electricity prices stood at RMB 0.455 per kWh. If tariffs rise another 20.5% in 2022, the price will climb to RMB 0.55 per kWh, erasing any cost advantage South Africa once enjoyed over domestic rates.
Overall, the chromite market is influenced by a range of factors, including supply capacity, production costs, transportation logistics, and demand, while also being closely tied to geopolitical developments abroad. Chromite used in the refractory materials industry accounts for only a small share of the global chromite market. Moreover, due to environmental concerns related to chromium, industries such as cement are vigorously pursuing chromium‑free refractories, leading to a gradual decline in the use of chromite within the refractory sector.

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Steel production has declined, and refractory material output is likely to follow the same trend in the first quarter.

According to data from the National Bureau of Statistics, in March 2022, China’s crude steel output totaled 88.295 million tons, down 6.4% year on year; for the January–March period, cumulative crude steel production reached 243.376 million tons, a decline of 10.5% compared with the same period last year. Recently, the National Development and Reform Commission and other ministries also stated that, to ensure policy continuity and stability and to consolidate gains in reducing crude steel output, nationwide efforts to cut crude steel production will continue in 2022. These measures will help achieve a year-on-year reduction in national crude steel output for 2022, guiding steel enterprises to abandon the extensive growth model focused on volume and promoting high-quality development in the steel industry. Based on crude steel production data, we can infer that refractory material output is likely to follow a downward trend as well. The main reasons are: (1) In the first quarter, overlapping environmental‑control measures during winter and spring, targeted enforcement periods, and the Lunar New Year holiday slowed the production pace of both steel and refractory manufacturers; (2) Since late February, the ongoing nationwide COVID‑19 situation, rising logistics costs, and transportation disruptions have hindered raw‑material procurement and finished‑product delivery, leading to inventory buildup for some products; and (3) Weak demand and rising production costs have kept trading activity at a subdued pace. Taking alumina—the key raw material for refractories—as an example, many alumina producers have operated at reduced capacity or with limited enthusiasm, driven by a combination of factors including higher raw‑ore prices and soaring fuel costs.

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