Eti expects ferrochrome companies to consolidate

BERLIN - Reuters

Rising costs and shrinking demand will force consolidation in the ferrochrome industry over the next two years as companies compete in a market that is likely to stay weak until 2014, the chief executive officer of ferrochrome producer Eti Krom said.

Robert Yüksel Yıldırım said low ferrochrome prices and rising energy, labour and transport costs had squeezed margins and prompted cutbacks and shutdowns in the sector, with smaller firms in Europe and South Africa likely to become merger and acquisition targets as they struggle to compete.
Yıldırım said Eti Krom, Turkey’s largest chrome ore and ferrochrome producer, is also on the lookout for acquisitions to expand its mining business division.

“Due to financial problems, some junior and mid-size ferrochrome producers are under pressure just to generate cash flow. And that puts pressure on the industry,” Yıldırım said on the sidelines of a Metal Bulletin ferroalloys conference.

“We feel that major players who have funds will try to make acquisitions in 2013, and we may see changes in the industry in the next two years.” Prices are nearing a bottom, and more shutdowns among smaller-scale miners are expected next year before the market sees a recovery in 2014, Yıldırım said.