SHANGHAI, Mar 16 (SMM) - The dual energy consumption control policy has been frequently mentioned in the past two years, and the requirements of controlling the total amount and intensity of energy consumption have become more and more important for the sustainable development of energy-intensive ferrochrome smelting in various places.
This article will briefly analyse the changes in demand for chrome ore across China through the changes in the types, regions and even quantities of chrome ore imports in the past two years.
In terms of imported ore types, South Africa is still China's most important source of chrome ore imports, which accounted for 81% of China's total chrome ore imports in 2020-2021, followed by Turkey and Zimbabwe, accounting for 6% and 4% respectively. The proportion of Turkey ore imports increased from 4% in 2020 to 7% in 2021, while South Africa ore imports dropped from 82% in 2020 to 80% in 2021, but import volume climbed slightly from 11,722,900 mt in 2020 to 11,790,000 mt in 2021. The annual import volume increased from 14,314,700 mt in 2020 to 14,525,700 mt in 2021, an increase of 1.47% year-on-year.
The changes in South Africa ore imports are due to the repeating pandemic in the region that seriously affects the shipment, coupled with the outbreak of large-scale unrest in the port of Durban in 2021. On the other hand, electricity restrictions in 2021 seriously affected the production in China, hence domestic ferrochrome prices soared amid supply shortage, and domestic demand for high-quality chrome ore increased as well.
In terms of regional customs, 18.91 million mt of ore were imported through the customs in north China in 2020-2021, with 8.63 million mt in 2020 and 10.28 million mt in 2021, an increase of 19.21% YoY. Chrome ore imports from South Africa accounted for 80% of the total imports, followed by Turkey (6%) and Zimbabwe (5%). The proportion of ore imports from South Africa increased from 78% in 2020 to 82% in 2021.
Meanwhile, from 2020 to 2021, 10.32 million mt of chrome ore were imported though the customs in south China in, with 5.69 million mt in 2020 and 4.64 million mt in 2021, down 18.43% year-on-year. Chrome ore imports from South Africa still accounted for the largest share of 82%, followed by Turkey, Zimbabwe, Pakistan with a proportion of 6%, 3%, 2% respectively. The proportion of supplying countries has changed significantly in the past two years. The proportion of chrome ore imports from South Africa dropped from 88% in 2020 to 76%, those from Turkey rose from 3% to 10%, and climbed from 1% to 6% for Zimbabwe ore. The imports through customs in south China dropped as a whole, but the proportion of non-South African imports of chrome ore increased.
The regional differences are partly because in the ferrochrome producing area in north China, large closed submerged arc furnace production capacity accounted for an increasingly large proportion, and relative advantages in terms of energy consumption, environmental protection, cost have strengthened in the past two years. The ferrochrome output has recorded an even greater difference with that in the south, generating more demand for chrome ore. And the furnace charge between south and north is also different.
Throughout 2020, the profit of ferrochrome smelting has been quite low, and the demand for cheap South Africa fine ore increased in the south. In 2021, the smelters in south China favoured other high-quality ore under high ferrochrome smelting profit. But with ferrochrome production profits dropping, the operating rates dropped amid high cost due to lower proportion of South Africa ore.
In north China, due to tightening environmental protection policies since 2020, small and open or semi-closed submerged arc furnace gradually withdrew from the market. But closed submerged arc furnace could not use fine ore directly, which will be sintered first. As such, the demand for lump ore from Turkey and Pakistan dropped, while demand for South Africa ore rose in north China.
Chrome ore import difference between north and south China and in terms of supply countries fully illustrate that the development of ferroalloy industry has progressed from the early stage of rough development. In the current stage, energy efficiency control and environmental emission norms are not only temporary environmental protection check, but also critical means to reduce the electricity prices for enterprises, lower the cost of raw materials, enhance competitiveness to promote industrial technology upgrading, and enhance the competitiveness of enterprises.
