LONDON, July 18, 2016 /PRNewswire/ --
Roskill has released its new chromium market report with forecasts out to 2026. It is essential reading for anyone needing a comprehensive overview of chromite, ferrochrome, chromium metal and chromium chemicals markets.
Chromium: Global Industry Markets and Outlook to 2026, 13th Edition is now available from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL UK. Click here to download the brochure and sample pages.
(Logo: http://photos.prnewswire.com/prnh/20150909/264974LOGO )
World chromite consumption totalled 29Mt in 2015 with 92% consumed in metallurgical applications. Non-metallurgical applications for chromite can be separated into chemical applications (6% of consumption in 2015), foundry applications (2%) and refractories (1%).
Stainless steel is by far the biggest end-use market for chromite and, therefore, trends in chromite consumption closely that of stainless steel production. Ferrochrome is used in the production of stainless steel. Asia dominates demand for all ferrochrome grades and its share of consumption increased substantially over the decade to 2016, while Europe, in particular, saw its market share reduce.
China's growing demand for ferrochrome for stainless steel production underpinned Asian ferrochrome consumption growth. Importantly, China has typically had a much lower scrap usage rate (22% in 2015) than established economies such as the USA (48%). As a result of the much lower scrap ratio prevailing in China, the consumption of ferrochrome in stainless steel has significantly outpaced the growth of stainless steel production.
What does the future hold? Future trends in stainless steel production will be the main determinants of future ferrochrome and chromite demand. Roskill's forecasts put stainless steel production growth 4%py to 2026. Importantly, growth in demand for stainless-, full alloy- and HSLA steels, is expected to outperform total steel demand. This is because while there has been a slowdown in construction, China's economy is going through a period of transition, resulting in higher levels of per capita income shifting demand towards higher-value products and construction projects that typically involve more use of advanced steels.
Roskill's baseline outlook assumes stable growth in HC ferrochrome, charge chrome and MLC ferrochrome demand to 2026. As growth in China's production and consumption of stainless steel has slowed, the country's scrap ratio will most likely rise considerably over the next two decades, eventually reaching the 40-50% seen in the other main stainless-producing regions of the world. Such increases in this scrap ratio could have an adverse effect on primary raw material demand.
The outlook for demand growth in non-metallurgical applications is also positive. Demand for chromium chemicals in leather tanning, and demand for chromic acid used in plating, is forecast to grow at 1%py, while demand for chromic acid in chromated copper arsenate (used in industrial wood preservation) is forecast to grow by 3%py. Only chemical consumption in chromium pigments is expected to decline. Demand for chromite foundry sands is expected to grow at 0.5%py over the period to 2026, while the use of chromite in refractories (including direct application and use via chrome oxide) is forecast to decline at a similar rate.
Will there be enough material to meet this future demand? Chromite resources are found worldwide and are abundant. World resources are greater than 12Bnt of shipping-grade chromite, sufficient to meet conceivable demand for centuries. As such, Roskill does not foresee any shortage of chromite. The three biggest producing countries, South Africa (which also produces UG2 concentrates from PGM production), Kazakhstan and India, will provide nearly all of the additional chromite required to meet the anticipated 1.6%py growth in demand for chromite to 20206. Further, if prices continue to recover, there are numerous projects in Albania, Canada, Oman, Turkey, the Philippines, Russia and Zimbabwe that could advance towards production.
It is, however, important to note that this outlook for global chromite supply points to an emerging trend in terms of ore quality. With the majority of additional ore supply expected to come from South Africa, and little increase in output of high-grade ore from countries such as Turkey envisaged, more and more lower-grade ore will enter the market. South African ore will continue to be in demand domestically and exports will continue to mostly be to China. Importantly, China's utilisation of scrap falls well below the global average, meaning that good-quality HC ferrochrome, as opposed to charge chrome (made from South African ore), is really required. While Chinese consumption of chromium units derived from scrap is forecast to increase, it is possible that China will be forced to produce lower-quality stainless steel, as HC ferrochrome production/consumption diminishes compared to charge chrome production/consumption.
South Africa, China and Kazakhstan were the major producers of HC ferrochrome and charge chrome as of 2015, while China and Russia accounted for the majority of global MLC ferrochrome supply. Existing producers will be able to meet rising demand for ferrochrome over the decade to 2026. Capacity utilisation for HC ferrochrome in South Africa was 79% in 2015. Extra capacity could be utilised if idle furnaces come back on line after recent closures. Chinese output could also increase. Between 2012 and 2015, Chinese ferrochrome output rose by around 600kt, whilst capacity rose by 4.0Mt, almost doubling. This has created an enormous problem of overcapacity in the Chinese ferrochrome industry, which is partly responsible for the poor market conditions prevailing over the past two years.
Future growth is also expected in chromium metal and chemical production. Output of chromium metal increased at 4%py over the 2008 to 2015 period. Russia and China are the leading producers, together accounting for over 60% of world supply. Roskill expects demand for chromium metal to increase at roughly 3%py and that existing European and Chinese producers will be able to meet this anticipated increase. Roskill puts total chromium chemicals production at 622kt sodium dichromate equivalent in 2015. China is by far the biggest producer. Steady demand growth of around 2%py is forecast. It is expected that existing producers, mostly in China and the USA, will meet this demand.
Email: info@roskill.com Web: www.roskill.com
Share this article