CEO Steve Phiri said that he was confident that the market would remain buoyant; with stainless steel production – the material’s main use – expected to pick up during the last four months of 2008, coupled with a supply deficit.
There had been a slowdown in stainless steel production, after traditional Northern Hemisphere plant shutdowns and destocking as buyers waited for raw-material prices to cool, but this was only temporary, he stated.
“We will see some picking up in the fourth quarter,” Phiri said in a presentation in Johannesburg.
He commented that it was encouraging that the Chinese government was still committed to growth.
Meanwhile, supply constraints on South African producers were expected to cause a supply deficit in the ferrochrome market for 2008, going into 2009.
The rise in prices and higher production for the second-half of 2008 would lead to even stronger earnings a share for Merafe than the first six months of the year, Phiri stated.
Merafe Resources, which has a ferrochrome joint venture with Xstrata, on Wednesday said that profit for the six months to end June had shot up to R602-million, which was 540% higher than the figure for the same period in 2007.
Headline earnings a share had vaulted up to 25c a share for the first half of 2008, compared with the 4c a share figure it reported for the first six months of 2007, on the back of higher prices for the stainless steel-making ingredient.
About three-quarters of global ferrochrome production comes from South Africa.