Ferrochrome prices could beat the record $2,05/lb level reached for the third quarter of this year in the following six months, JSE-listed Merafe Resources said on Wednesday.

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. – Mining Weekly