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As market participants prepare to gather in London for LME Week , Fastmarkets looks at how ferro-chrome supply chains have been affected by the reduction of South African output in 2025.The global ferro-chrome supply chain has been navigating major changes, as market participants have adjusted to the prolonged reduction in supply from South Africa.
Producers in South Africa, historically a key supplier of charge chrome especially, have cut back their production significantly in response to issues such as growing competition from domestically produced material in China and an unstable energy price backdrop.
While indications of support for the chrome industry have emerged from the South African government in recent months, the production cuts there have led to a shift in the way the industry accesses supply, not only in the charge chrome market, but across the supply chain, industry sources have suggested.
While China’s substantial domestic smelting capacity has been able to fill some of the gap, sources have suggested it has been unable to do so entirely, and concern remains about long-term supply security and the possible need to diversify sources, not only in China, but elsewhere worldwide.
The cutbacks to South African production, which began in earnest toward the end of the first half of 2025, were precipitated by a shifting market backdrop, in which sentiment became persistently negative, driven by a weaker downstream market, especially in China.
The market in South Africa began to face serious challenges into the end of 2024, as successive declines in monthly ferro-chrome tender prices published by major Chinese stainless steel mills put pressure on imported charge chrome prices.
In turn, Fastmarkets’ weekly price assessment ferro-chrome 50% Cr import, cif main Chinese ports dropped to $0.79 per lb contained Cr by the end of 2024, its lowest level since January 2021.
Over the course of 2025, prices have seen a return to strength, linked mainly to the supply tightness in the seaborne market as a result of the cutbacks, but also to relatively strong buying appetite, with levels peaking at $1.05 per lb contained Cr over the summer, before dipping to $1 per lb contained Cr on September 9.
The level rebounded to $1.03 per lb contained Cr on September 30, holding there on October 7.
Electricity costs in South Africa have also been a sticking point, meanwhile, especially given the energy-intensive nature of ferro-chrome production.
“[Producers] are waiting to see if a tariff can be put in that would make South African smelters more competitive,” a ferro-chrome trader in Europe told Fastmarkets.
At the same time, there have been some positive signs.
In recent months the National Energy Regulator of South Africa (NERSA) has taken steps such as, in July, approving the relaxation of the take-or-pay requirement of 70% for the Glencore-Merafe joint chrome venture and Samancor for six months starting from August 1.
The South African government has also announced plans to introduce export controls on chrome ore, as part of an “industrial intervention to revive South Africa’s ferro-chrome industry competitiveness”, which were put to public consultation on October 3.
And on October 6, President Cyril Ramaphosa flagged plans for export tariffs on chrome and manganese, as well as plans for preferential electricity tariffs for ferro-chrome, manganese and steel.
This has led to some increased optimism, a ferro-chrome trader in Europe suggested.
“[I think] there’s some positive momentum again,” they said.
However, pressures have remained, especially as export volumes of ferro-chrome from South Africa to China in particular have fallen.
Official customs data from China has shown that while South Africa was China’s largest import source in 2024, supplying 1.82 million tonnes of a 3.66 million-tonne total, shipments have dwindled in 2025.
In the first eight months of 2025, according to customs data, imports of ferro-chrome containing by weight more than 4% carbon from South Africa amounted to 830,000 tonnes, dipping as low as 35,005 tonnes for May, before rebounding to 73,630 for June, with the figure for August at 60,948 tonnes.
The average monthly import figure for 2024 was 151,653 tonnes.
Production cutbacks in South Africa have deepened in recent months, with producers there facing major challenges related to issues such as high electricity costs as well as the increased competition from production in China.
At the same time, output of ferro-chrome in China has grown in 2025, and with generally lower prices, leading to comparatively lower buying appetite in the seaborne charge chrome market.
This contributed, for example, to decisions such as that of South Africa-based chrome ore and ferro-chrome producer Merafe Resources, which has a chrome pooling and sharing venture (PSV) with Glencore Operations South Africa Proprietary, to announce in February that it had started a business review process at its ferro-chrome smelting operations.
In April, it announced plans to idle its smelting operations at Boshoek and Wonderkop, northwestern SA, starting from May, and in June, it confirmed it had brought forward the maintenance closure of its Lion plant, northeastern SA, with the shutdown to last at least three months.
Following the production cuts, Glencore, which has a 79.5% stake in the venture, posted attributable ferro-chrome output of 433,000 tonnes in the first half of 2025, down 28% from 599,000 tonnes in the first half of 2024.
Meanwhile, Merafe stated in its half-year report for the six months ended June 30 that it had “a cautiously optimistic outlook” in view of the measures announced by the South African government aimed at supporting the ferro-chrome industry.
Across South Africa as a whole, substantial reductions in output may be possible this year and into 2026.
“I think that indeed we are in for a big drop in ferro-chrome production this year in South Africa, and that a fall from 3 million-3.3 million tonnes during 2024 towards 2 million tonnes this year is reasonable,” Fastmarkets senior analyst Robert Cartman said.
“Next year, if things stay the same with regard to the shutdowns in South Africa, which have intensified this year, then another pullback in South African output for 2026 as a whole is reasonable and output could conceivably come in at 1 million-1.5 million tonnes.”
Output in China – the world’s largest producer of stainless steel and consumer of ferro-chrome – has seen growth during 2025.
Market participants have estimated monthly output rose from about 600,000-700,000 tonnes in early 2025 to about 800,000-850,000 tonnes from June onwards, driven by strong demand and increases in both spot and tender prices.
Chinese market participants have reported little disruption to supplies, as local smelters have ramped up operations in recent months.
“We don’t see any supply disruptions,” a China-based ferro-chrome trader said. “[I think] the gap is easily filled by Chinese producers.”
However, other sources in the market have suggested that even with the increase in monthly domestic output in China, South Africa’s smaller presence as a supplier into the ferro-chrome market in the country may be difficult or even impossible to make up for entirely.
“Supply remains tight, and any sudden improvement in global demand could further strain availability, leading to even greater market imbalances,” Ali Vishaj, director of ferro-chrome at Austria-based mining, processing and trading company LL-Resources (LLR), said.
Sources on both the buy and sell sides have suggested it will be necessary to diversify supply, whether by quality or origin or both.
In turn, this is expected to have a ripple effect across different markets, with supply potentially shifting and being spread more thinly.
“I believe most affected would be [those] in South Korea, Japan, Europe and the Americas,” Vishaj added.
In terms of alternatives, various origins are available, sources have suggested.
“I would say that market players should be looking into diversifying their supply chain; material from Brazil and India is becoming more available and attractive,” a buy-side source said. “However, South Africa remains a dominant producer and a reliable source of material.”
More broadly, a possible contender as an alternative could be material with 50-58% chrome content, as a close match to South African output in terms of application and specification, according to Vishaj, citing production at the Al Tamman plant in northern Oman, in which LLR has a 50% stake.
Vishaj flagged the plant’s ability to provide a variety of different grades, ranging from 55% minimum chrome content to 65% minimum, but added that its current capacity was limited – a possible stumbling block for other producers, in light of the capacity shortfall from South Africa.
“With our current annual capacity limited to approximately 50,000 tonnes, we acknowledge that while we can help meet some of the demand, this will not be sufficient to resolve broader supply constraints in the market,” Vishaj said.
Zimbabwe has also been flagged as a possible alternative supplier, although it has faced similar issues to South Africa in terms of energy supply, and output has yet to ramp up significantly, with Fastmarkets’ estimate of total output for 2024 at 350,000-400,000 tonnes in 2024, and similar levels expected for 2025.
“[I think] Zimbabwe is not a viable option,” a third sell-side source said. “And India is selling more domestically, due to its growing market.”
For example, India has plans to expand its stainless steel capacity to 9.3 million-9.5 million tonnes by 2030, then to 12.5 million-12.7 million tonnes by 2040, and to 19 million-20 million tonnes by 2047, according to a report published by the Indian Stainless Steel Development Association (ISSDA).
A market source in India added that access to chrome ore in the country had also been an issue, with production affected by the monsoon season.
“India doesn’t have sufficient supply [of ferro-chrome] due to chrome ore issues,” they said. “[Some] producers are not offering because of this.”
The source in India also suggested that, in turn, sellers there were unwilling to accept lower prices, given the market backdrop.
Indeed, Fastmarkets’ weekly price assessment for ferro-chrome high carbon 6-8.5% C, basis 60-64.9% Cr, max 3% Si, cif Europe – a strong reflection of the situation in India, with much of this material originating there – has seen steady inclines in recent weeks.
The level on October 7 was $1.17-1.33 per lb Cr, up from $1.18-1.27 per lb Cr the week before, with several incremental rises, having been below $1 per lb Cr as recently as August 5.
Markets in the West, including other grades of ferro-chrome, are also experiencing the effects of the shift in supply dynamics to some extent, although the effect has taken time.
“We didn’t see a shock on the price side because demand is much lower than it used to be,” the sell-side source said. “There’s much less stainless steel produced in Europe [as well].”
However, market participants have nonetheless flagged the knock-on effects of the supply disruption.
“What we can see is that there’s a shortage of material on the ferro-chrome side,” a second sell-side source said. “There are no oversupply conditions.”
They added that even in these circumstances, there had been little effect on prices, with so much competition from China not only in terms of ferro-chrome output but also cheaper steel exports coming into Europe.
Meanwhile, Vishaj reported that there had been some uptick in buying interest in recent weeks, for certain grades at least.
“For Oman production in particular, the grade Cr 55% min or 58% min, which has specifications close to South African grade, has been the most in-demand product but also the grade Cr 65% with C 7% max is in high demand,” he said.
The effect of South Africa’s absence is still under consideration for other major importers like Japan and Indonesia, who have historically relied heavily on ferro-chrome from South Africa, as have Kazakhstan and India.
Thus far, Japanese consumers have reported no immediate shortages, but concerns about future procurement risks are mounting.
“Japanese consumers are currently able to purchase without any issues, but they are concerned about the risks associated with procuring in the future and seem to feel a strong need to diversify their purchasing sources,” a Japanese trader said.
Another source in Asia suggested that the lack of full-scale demand recovery in Japan’s stainless steel sector has so far masked potential tightness.
“If South Africa continues to cut production further, it would not be surprising to see changes in the market after entering the next fiscal year,” they said.
“For ferro-chrome, there are much greater structural challenges, but the market is basically split into China and the rest of the world,” Cartman said.
“China is almost an isolated case as it has moved from importing ferro-chrome to making ferro-chrome with imported ores, and the availability of ore is not of such great concern.”
For the rest of the world, he said, consumers are mostly dependent on importing ferro-chrome, including, to varying degrees, ferro-chrome from South Africa.
“Ferro-chrome could be sourced elsewhere, but there is a limit to this trade given current capacities and also growth in local demand in the case of India,” Cartman said.
The volumes of chrome ore being exported to China have been broadly sufficient for the amount of ferro-chrome produced there, he added.
For example, China imported 20.9 million tonnes of chrome ore in 2024, up from 18.3 million tonnes in 2023 and 15 million tonnes in 2022. During the first eight months of 2025, it imported 14 million tonnes, an increase of 2% on the same period last year.
“In general, there is more or less enough ore being mined and shipped to smelters in China. That market goes in and out of moments of tightness, given some seasonal trends in South African mining,” Cartman said.
In terms of countries with potentially the greatest exposure to the reduction in ferro-chrome output in South Africa, Indonesia has had the greatest dependence, although the country has been ramping up domestic production in recent years.
“[Indonesia] has been following in China’s footsteps, ramping up local production of ferro-chrome instead of importing it, and its imports of ferro-chrome are down a lot this year,” Cartman said.
“But it would seem the US, and a [number] of Asian countries are the most vulnerable. Europe of course is home to some ferro-chrome smelting capacity, but stainless steel producers there face other challenges with regard to imports in the future [such as the implementation of the Carbon Border Adjustment Mechanism (CBAM) from January 2026.]”
A sustained rise in ferro-chrome prices spurred by supply shortfalls, and especially outside China, could help to support the development of scrap collection networks and usage in Asia, where stainless steel producers often use lower levels of scrap in their melt, he added.
“CBAM may also spur this, as Asian stainless producers look to remain competitive in European markets but, in the short term, I think a lot of buyers are going to be squeezed next year,” he said.
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