Plunge in prices, Covid-19 strain ferrochrome producers
THE global Covid-19 pandemic has forced most Zimbabwe’s ferrochrome producers to switch off furnaces following a plunge in prices. This was worsened by several other internal factors including high operating costs that made running furnaces unviable.
The disease surfaced in late 2019 in China and become a full-blown crisis worldwide. Almost every country declared national emergencies to combat the spread of the disease, which has so far infected 30 million people. Beyond its impact on human health, Covid-19 disrupted an interconnected world economy through global value chains, which account for nearly half of global trade. It also resulted in abrupt falls, fiscal revenues, foreign exchange receipts and commodity prices, including ferrochrome, an essential ingredient in stainless steel production.
Zimbabwe has more than 10 ferrochrome producers and only two, AfroChine JinAn are operating, but at very subdued levels, according to a Government report on the state of industry during the lockdown period, which began in March this year. Other companies including Zimasco and South Africa’s Portnex, which was leasing the western section of Zimasco’s Kwekwe plant, have kept their units offline.
Chinese industrial production is back to pre-Covid-19 levels and this has seen demand moving up. On the global demand side, China consumes about 60 percent of ferrochrome. As such, China’s ferrochrome prices are on uptrend with better demand. However, local producers are unlikely to benefit from firming prices due to other internal challenges. – BH24
