Chrome production and consumption remained constrained during the second quarter of this year, in line with lockdown restrictions implemented in various countries, says the International Chromium Development Association (ICDA).

While stockpiles of ore and stainless steel in China remain relatively high, there is evidence of a pick-up in domestic demand in the country. However, while the ICDA cautions that the figures for the second quarter were preliminary, it highlights that they confirm the trend of a continued decrease in production amid the continuing Covid-19 global crisis.

The year began with a decrease in demand for ore and alloys, as well as chrome ore and ferrochrome production cuts in various countries, including in South Africa, owing to diverse reasons including the global economic slowdown, lockdowns, energy issues in South Africa and mine auctions in India.

Demand also decreased amid the lower demand from downstream value chains, including stainless steel products, given the difficult economic context.

Output for chrome ore and ferrochrome continued on its downward trend in the second quarter of this year. The drop in ferrochrome production in the second quarter was less important than in the first quarter because China, the top ferrochrome producer in the world, was affected by the pandemic in the first quarter and started showing signs of recovery in the second quarter.

However, the drop in ore production was more dramatic in the second quarter than in the first quarter as more ore-producing countries, which had remained unaffected in the first quarter, were affected by lockdown measures owing to Covid-19.

Such bottlenecks and secondary disruptions mean that, even after the easing of lockdown measures in producing countries, it is expected that normalization will take some time.

At current consumption rates, China currently holds an estimated three months' worth of chrome ore stocks in its ports, which gives it some leeway in terms of future supply disruptions.

The ICDA cannot forecast chrome production and consumption, given its status. At this stage, it is difficult to predict what will happen, and the scenario will be markedly different depending on whether a second wave of Covid-19 will affect the world again, as well as taking into account the response to it.