With the release of its operational performance for the six months ended December 31, 2008, Kovarsky noted that IFM was disappointed in the collapse of ferrochrome demand, which has prompted it to cut production, shut its furnaces and delay its capital expenditure projects.

“The board is pleased with the management’s swift response both to the situation and the inherent operational challenges. The production figures for the first half of the year illustrate the high quality of IFM’s ferrochrome operations,” he said in a statement to shareholders.

Production was down by 47% in the second quarter to 31 289 t, compared with the 59 470 t produced in the first quarter of the year.

IFM reported that global ferrochrome production cuts amounted to about 70%, while production from South Africa had been reduced by about 85%. South Africa is the world’s largest ferrochrome producer.

Meanwhile, the company, as well as ferrochrome industry commentators, had already started seeing a “revival” of demand from China.

The producer said it has started receiving more enquiries for material from Chinese stainless steel producers, with smaller numbers of enquiries coming from Europe and the US.

However, there was an abundance of chrome-ore inventory and enough ferrochrome available on the market, particularly from Indian and Chinese producers, which would continue to dampen prices and demand from non-Chinese sources, it said.

In order to ensure its sustainability through the current economic times, the company has implemented cost control measures, such as terminating contractor staff and reducing its monthly expenditure by R35-million.

It had also stopped purchasing coke, which had been its second-biggest input cost, but would keep in contact with its suppliers to ensure that availability of supply in future.

IFM was budgeting R100-million total capital spend for the remainder of the financial year. This would include spend on furnace maintenance, which would be concluded in March.

The company’s half-year results would be released on February 23.

Samancor Chrome has suspended 100% of its capacity since early last month until March 1, when the situation will be reviewed, he said.

Late last year a smaller producer, International Ferro Metals, which is listed on London’s AIM but operates in SA, also suspended all operations until March and said it would use the downtime for maintenance. Other producers have suspended 50% or more of capacity since early last month.

The Xstrata-Merafe joint venture is the biggest ferrochrome producer in the world, with about 20% of the market, followed by Samancor Chrome with about a 13% market share.

SA is the world’s biggest ferrochrome producing country.

Xstrata Alloys said it had suspended operation of another six furnaces, adding to the 11 suspended last month , because of current market conditions. That meant that 1,37-million tons or 80% of operating capacity had been put on hold.

No retrenchments of permanent employees was expected, which meant the joint venture could return to capacity quickly when market conditions allowed, it said.

Konchar said Samancor Chrome, which employs about 6500 people including contractors, would do everything possible to avoid retrenchments.

The company was in discussions with the unions and various options, such as working shorter hours, would be explored.

Samancor Chrome had responsibilities to both employees and shareholders, he said.

London-based investment house Fairfax said in a note to clients that the closure of further furnaces showed the poor state of the market. It expected ferrochrome producers could remain shut for the first six months of this year while the stainless steel industry worked through stockpiles.

Konchar said he had never seen conditions as bad as this in the ferrochrome industry.